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Normative ethics
A short guide to the theories and their application
Second edition
John Hendry
2013
The treatments of normative ethics found in textbooks on business or professional ethics are often
far too cursory, given the weight attributed to them in the course as a whole. They are sometimes
unintelligible, and sometimes plain wrong. They are very rarely accompanied by any guide as to
the limitations and strengths of each theory, when it is best used, or when it is best avoided. The
result, all too often, is sloppy applications, and in dealing with problems of ethics sloppiness is the
last thing we need. It generally matter less what particular approach someone uses than that they
should use it with care and rigour. There are of course some excellent textbooks that avoid these
failings, but they often don’t do what teachers want to do in other respects and it is hard to ask
students to purchase two textbooks for a course they might not be that keen on anyway. There are
also some excellent introductions to ethics for the general reader, some of which can be bought
very cheaply. But these tend to give far more discussion than the students want or can cope with.
This paper is intended for use as open access supplementary teaching material, for people who
want a rigorous approach to ethics, but want for various reasons to use a textbook that doesn’t
have one.
A slightly more restricted version of the treatment given here, but with footnotes and full
references, can be found in Chapter 3 of my 2013 book Ethics and Finance: An Introduction
(Cambridge University Press).
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Introduction
There are many varieties of normative ethics and many versions of each variety. I shall focus here
on a selection of approaches that appear to be particularly useful and relevant to areas of
application such as business ethics or professional ethics. My main focus will be on three sets of
theories. Utilitarianism judges actions by their consequences, assessed in terms of some measure
of utility. Its application typically takes the form of a kind of cost-benefit analysis, but applied to
the utility function for society at large rather than to that for a particular actor. Kantian ethics
focuses on the actions themselves and the principles that might be adopted to guide people in these
actions, irrespective of their consequences. It suggests that people have an unconditional ethical
duty to follow principles that are universalisable and that treat people as ends not means. Various
kinds of Contractual and Consensus ethics, mainly rooted in Kantian ideas, identify what is
ethical with what people can or could reasonably agree to. Virtue ethics focuses on the character of
the actor rather than on the actions or their consequences, and equates the ethical with what a
virtuous person would do in any particular situation. I shall also look very briefly at two other
theories that maybe have a more limited application but provide useful counterpoints to the the
main ones: the ethics of rights and the ethics of care.
In the following sections I shall briefly introduce each of these approaches. In the final
section I shall address the practical question of their application, looking in particular at which
theory seems to work best in which circumstances.
Utilitarianism
According to Act Utilitarianism, any action that increases total utility across society is good and
any action that decreases it is bad. To act ethically is to act so as to increase or, ideally, maximise
total utility.1
This approach is intuitively attractive. It clearly captures something important about
ethics, and seems to offer a wonderfully simple rational procedure for resolving ethical issues.
When we try to apply it, however, we run into a range of difficulties. These don’t necessarily
detract from its value as a theory. Indeed, they bring to the fore some important ethical issues that
other theories fudge or ignore. But they do make it hard to apply in many circumstances. I shall
discuss these under two headings: general procedural difficulties and difficulties of definition and
measurement.
From a procedural perspective, we often have neither the time nor the means to work out
the consequences of our actions. Many ethical decisions have to be made more or less on the spot,
when confronted with a difficult and unexpected situation – a fight, an intruder, a child in danger.
It may simply not be practical to work out, even roughly, what the consequences might be before
deciding what to do. It may not even be ethical. Stopping to calculate all the consequences before
acting has consequences itself: the child in danger might die if you delay. And even in the absence
of such consequences, stopping to calculate all the consequences before going to someone’s aid is
not what we normally think of as ethical behaviour: in the words of philosopher Bernard Williams
it's 'one thought too many'
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1 Note that I am using ‘utility’ here in a relatively broad sense, to incorporate anything we might reasonably
include in a social utility function. Some philosophers give it a much narrower meaning and would call the
approach outlined here consequentialist, but not strictly utilitarian.
Even if we set aside the time issue, calculating the future consequences of an action may
simply not be feasible. When economists calculate the financial return on an investment, they
normally assign probability distributions to the future values of key variables and estimate the
expected return. But how do they know what probabilities to use? In most cases they don’t know,
and can’t know. As a succession of leading economists have pointed out, from Frank Knight to
John Maynard Keynes to Herbert Simon, the future is radically uncertain, and beyond even
probabilistic calculation. Not only do we not know things, we don’t and can’t know what we don’t
know. In the wake of the recent financial crisis, as many writers are beginning to stress, this
problem can't be ignored. When we turn from the relatively simple problem of maximising the
financial returns on an investment to the massively more complex one of maximising the utility of
society as a whole, radical uncertainty becomes even more of a problem.
Herbert Simon’s response to the combined problems of radical uncertainty and the limits
of human cognition (even if we had the information we couldn’t possibly process it), in the context
of business administration, was to argue that a rational manager would not attempt to calculate
everything but would ‘satisfice’, using simplifying assumptions and procedural algorithms to
reach conclusion that were good enough to work with. Contemporary utilitarians, similarly, turn to
rules and algorithms to overcome the procedural problems associated with calculation.
Indirect act utilitarians share something very similar to Simon’s concerns about the
limitations of human cognition and forecasting. They recognise that maximising the utility
consequences of every individual action is completely impracticable, and that trying to do it is
likely to be counter-productive. The best way to maximise the utility of our actions, they suggest,
is to critically analyse a range of typical actions; to use this analysis to develop simple guidelines
as to our general behaviour; and to follow those guidelines. Sometimes the individual actions that
result may not be utility-maximising, but overall this is the most effective way in practice to
maximise the utility consequences of our actions.
Rule utilitarians follow a very similar approach, but instead of developing guidelines or
rules on the basis of the consequences of typical actions they focus on the consequences of the
rules themselves. They seek to establish the general rules or social norms which, if followed by
everyone, would maximise overall utility. The weight of analysis here falls on the rule, and the
consequences of the general observance (or attempted observance) of one rule, or one set of rules,
as compared with some alternative. The requirement for the individual actor is simply to follow
the rules that have been established in this way.
Like the moral norms of a culture or traditions, the rules and guidelines put forward by
both indirect act utilitarians and rule utilitarians tend to be quite general and straightforward. In
practical terms, they need to be internalised and followed routinely, and complex rules or rules
subject to lots of explicit qualifications and exceptions would be badly suited to this purpose. This
means that there will inevitably be times when we want in practice to make exceptions, when we
want to say that in some exceptional cases breaking the rule is OK. We do this all the time for
social norms, respecting the general rule but understanding implicitly that it might not always
apply. But the point of a utilitarian analysis is to find the best rules for general application: the
rules that if always followed will be best overall, taking account of the cases in which they might
not give the best result but weighing these against the cases in which they do. We may in practice
want to make exceptions, but this does not invalidate the general rule.
In fact, the rules we get tend to correspond closely to the typical moral norms of a society:
‘don’t tell lies’, ‘don’t hurt people’, ‘don’t cheat’, etc. They tend to be very general, and they also
tend, like most social norms, to be negative rather than positive. A case can also be made out for
much more controversial rules, however, especially on the basis of rule utilitarianism. The rules
‘give everything you don’t actually need to the poor’, at one extreme, and ‘act according to your
narrow self-interest in economic affairs’ at the other, while radically different in their implications,
are both plausible candidates for utility maximising rules.
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The second set of difficulties with utilitarianism concerns definition and measurement.
First, for utilitarianism to work in practice, there must be some broad consensus as to how utility
is defined – what, in the language of economics, goes into the utility function. Is monetary wealth
an adequate measure of utility, or should we also (or only) take account of happiness, or pleasure,
or Amartya Sen and Martha Nussbaum’s notion of capabilities, which includes measures of
freedom, human rights and equality? If pleasure counts, will any pleasure do, or only ‘healthy’
pleasures? Should we be looking only at the total sum of wealth, happiness or pleasure, or also at
the ways in which these are distributed?
These difficulties of definition carry with them difficulties of measurement. Even if we
could agree on what properties to put into the utility equation, we might not agree on how to
measure and weight them. To a large extent this is a technical issue, which complicates the
application of utilitarianism but doesn’t seriously undermine it. However, it highlights a more
fundamental difficulty in reaching consensus on what really counts. For example, since we have,
in principle at least, to reduce all factors we take account of to some common currency in order to
add them up, what price do we put on a life? Is the life of a young Wall Street banker with future
expected earnings of $200 million worth times 20,000 times the life of a middle aged Indian
peasant with future expected earnings of $10,000? Or is it worth exactly the same? More
generally, are all lives of equal value, or are some more valuable than others? If the question were
put to them in these simple terms, most people would probably say that all lives are equal, but if
we look at the policies of governments and corporations around the world, many of which are
framed at least partly on utilitarian grounds, we seem to find an almost universal assumption that
some lives are more valuable than others.
In many applications of utilitarianism these difficulties of definition and measurement are
not a major problem. They don’t impact seriously on the philosophical arguments underlying the
theory, and so long as we apply it carefully – making sure, for example, to take account of
everybody affected by a rule,2 and to take account of the indirect effects such as the effects of
setting a good or bad example or the social effects of a particular welfare distribution – we shall
often reach much the same conclusion on any plausible definition or measurement of utility. There
will inevitably be cases, however, that are sensitive to the measures we adopt, and others in which
the definition of utility is both critical and contentious. These are, of course, the most interesting
cases to explore, but they need special care.
As a final general comment on utilitarianism, one of its most striking characteristics is that
it is in one sense strictly egalitarian. Because it is concerned with the overall utility of the whole of
society, indeed the whole world, it gives no-one any intrinsic priority. Economic calculations
obscure this, but if we think of utility in terms of happiness or well-being, the utility of any one
individual is in principle as important as that of any other.
One consequence of this is that distant strangers, people we have never met, weigh just as
heavily as people who are close to us, including ourselves. Suppose I give my mother a present on
her birthday: it no doubt makes her happy, and it might make her unhappy if I didn’t do it. But for
the same money I could probably save the life of a child in the developing world and it is hard to
construct an application of utilitarianism under which this would not be better. Similarly, it would
be very hard to justify on utilitarian grounds a policy that involved paying for private health care
or private schooling in a country like Britain, when the same money could achieve far more if
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2 A common student error is to focus only on those most immediately affected - for example, in assessing the
ethics of a business policy to focus only on the consequences for the shareholders, employees and perhaps
customers of the business. A utilitarian analysis in this case must also take account of the effect on the
shareholders, employees and customers of the the firm’s competitors, which will often cancel out the effect
on the firm itself (in competitive markets one firm’s loss is another’s gain). And it must take account of the
consequences for society at large, which are generally what matter most from an ethical perspective.
spent on health or education in the developing world. Indeed it would be hard to justify not
spending far more on such things generally than we do.
A recent estimate suggests that a tax of one per cent of gross domestic product on the
wealthiest nations could double the incomes of the poorest two billion in developing countries. A
simple act utilitarian calculation would here argue in favour of such a taxation policy, or at the
very least in favour of comparable voluntary donations. To not give a little to achieve a lot would
surely be unethical. Of course, nothing is quite that simple. Even if we set aside the problems of
implementation, all sorts of arguments can be made about the de-motivating effects of such
welfare policies, the value of individual freedom and suchlike. But here the basic calculation is so
simple as to be compelling, even though most of us, when it comes to it, give our own self-interest
priority over the ethical judgement.
In these respects act utilitarianism, whether direct or indirect, is very demanding. For
many of its advocates that is one of its attractions. But its critics contend that it goes too far: there
is nothing wrong, they argue, in prioritising the interests of those close to us, or even in pursuing
our own self-interest, so long as this does not actively harm other people. Rule utilitarianism is
much less exposed to this criticism. One might well argue, for example, that overall utility would
be maximised by rules that prioritised the well-being of one's own, family, community or society,
so long as they did no active harm to others.
A second consequence of egalitarianism is that act utilitarians run the risk of endorsing the
maltreatment of minorities. Imagine a policy through which the welfare of the majority of a
community is greatly enhanced, at the cost of the persecution or abuse of a small minority. It
would take some imaginative scaling of the utility attributed to different states of well-being for
this not to be good on a utilitarian calculation. But even if the sacrifice of the few for the benefit of
the many may arguably be right in some cases it is surely wrong in others. As in the previous case,
however, rule utilitarianism may be able to overcome the objection. A set of rules that protects the
interests of minorities may well lead to greater overall utility than one that ignores them.
Kantian ethics
The eighteenth century philosopher Immanuel Kant set out to derive ethics in the form of a
‘categorical imperative’, or absolute demand on any human being, based only on reason and a
conception of human beings as free-willed moral agents. The arguments he used are extremely
difficult and not always completely convincing, but the conclusions he reached are nevertheless
impressive and have remained at the heart of normative ethical debates to this day. Kant offered
four different but, he claimed, equivalent formulations of the categorical imperative, two of which
have been particularly influential in applied ethics.
According to Kant’s Formula of Universal Law, you should
Act only on a maxim (or personal principle) that you can also will (or rationally choose
or impose) as a universal law.
Philosophers have argued endlessly about how exactly this should be understood (the treatment
given here follows Korsgaard), but it seems to capture a number of important ideas.
First, it bears some relation to the ‘Golden Rule’, a moral norm that can be found in some
form or another in most societies: treat other people as you would want them to treat you or,
alternatively, don’t do to others what you wouldn’t want them to do to you. It is stronger than this,
however, in two ways. In the first place it is universalised. It doesn’t just say ‘don’t do to Joe what
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you wouldn’t want Joe to do to you’, but ‘don’t do to anybody at all what you wouldn’t want
someone - anyone - to do to you’. The particular relationship between you and Joe is explicitly
taken out of the equation. In the second place, it refers to what you could will as a universal law,
with a view to imposing it, not to what you might merely want. The criterion is meant to be
objective, dependent only on reason and not on feelings, wishes or preferences.
How this works is contentious, but the core of Kant's idea is that you can only will
something to be a universal law if you can will it without running into any rational contradictions.
Some maxims are not universalisable because they are self-defeating (we say there is a
contradiction in conception). A maxim of making promises without necessarily intending to keep
them, for example, if universalised, would deprive the practice of promise-making of any
meaning. Expressing it another way, a universalised practice of making promises and keeping
them only when it suited would defeat the purpose of the personal maxim of making promises and
keeping them only when it suited, since no-one would take the promises seriously anyway.
Other maxims are not universalisable because they contradict the notion of humanity from
which Kant starts (in Kant’s terms there is a contradiction of will). These situations are often
handled more simply by the other formulation of the categorical imperative that we shall look at
below, but willing as universal a maxim of harming yourself or others, for example, or of
neglecting your or their development, seems contrary to what human beings, as free-willed moral
agents, are all about. There is a contradiction between the purpose of the personal maxim and the
purpose of the human will.
A second observation on the Formula of Universal Law is that while it is often applied to
individual actions it is framed, like both rule and indirect utilitarianism, in terms of general rules,
principles, maxims and indeed laws. Despite the very positive phrasing, moreover, these general
rules or maxims take the characteristic form of negative injunctions: they are about what is not
permissible. Even a seemingly positive duty, like a duty to help others, is derived by Kant in the
form of a duty not to refrain, as a principle, from helping others.
These considerations are important when it comes to application. Take, for example, the
Kantian duty not to tell lies, which can be derived in the same way as the duty not to make
promises without intending to keep them. Universalised lying when it suits destroys the practice of
truth-telling and thwarts the very purpose of lying when it suits. Some critics argue that alternative
maxims that allow for exceptions, like ‘tell lies when it suits you but not too often’ are perfectly
universalisable even though clearly unethical: the 'not too often' would ensure that the practice of
truth-telling was not destroyed. But a Kantian would respond that this last formulation is not what
we mean by a general law or rule, whether in a Kantian or in a utilitarian context. A rule might
allow for some well-defined qualifications, but not for qualifications of the 'not too often' sort.
(Nor, we might say, of the 'when it suits me' sort, but since they evoke a specific purpose Kantian
ethics can explicitly rule these out as leading to contradictions, in the way we have seen.)
Other critics argue that the Kantian duty not to tell lies is too strict: it makes no allowance
for the exceptional cases in which it would be ethical to tell a lie. As we noted earlier, all general
rules are apt to be subject to exceptions. The way we deal with these in utilitarianism is by setting
the benefits of a simple rule against the costs of it sometimes not working. The way we deal with
them in Kantian applications is by invoking other ethical principles. So there is a duty not to tell
lies but there is also a duty not to hurt people and sometimes we have to choose between these.
That we have to do this suggests a weakness in the Kantian logic, but we know from the sciences
and social sciences that all theories are imperfect, especially when faced with the messy reality of
human life, and that they can still be very useful nevertheless.
Another criticism sometimes made of the Formula of Universal Law is that it seems to
prohibit maxims that seem positively good, but could not be universalised, like ‘give away all your
money’ or ‘stay celibate’. If everyone gave away all their money there would be no-one left to
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receive it, and if everyone were celibate there would, in time, be no-one left at all. The way to
avoid this difficulty is to restrict the maxims we consider, as Kant himself did, to those about what
is or is not permissible. A maxim of telling lies when it suits you does not fail because of what
would happen if everybody told lies all the time and nobody ever told the truth. That would
dramatically change the practice of truth telling, but would not necessarily destroy it. It fails
because of what would happen if people sometimes told lies and sometimes told the truth. If
people sometimes gave away all their money or stayed celibate when it suited their purposes, in
contrast, there would be no contradiction. The maxim 'it is not permissible to keep any of your
money, for any reason' is not universalisable, but that's fine: we consider giving money away to be
good for the purpose is serves, not as an end in itself. In the same way, some people's purposes are
served by celibacy, others not.
Summing up, while indirect utilitarianism requires us to abide by rules or principles that
maximise utility, the Formula of Universal Law requires us to abide by principles that can be
universally imposed without contradiction. The lists of principles that result are very similar, and
very similar to the moral norms we find in most societies: don’t lie, don’t harm, don’t steal, don’t
break the law, and so on. But the Kantian formula gives us a different approach that we can use
when utility is hard to gauge or seems to involve treating some people (because they are in a
minority, for example) differently from others.3
The other particularly influential formulation of the categorical imperative, and the one
that is probably most useful in practice, is the Formula of Humanity:
Treat humanity, whether in your own person or in any other person, always as an end and
never merely as a means.
This formulation, which derives straight from Kant’s conception of human beings, is easier to
apply, but it still needs some clarification if we are to understand it and apply it properly. The
underlying idea is that all human beings, whoever they are and wherever they are, are individually,
each one of them, of absolute, unquantifiable value as ends in themselves. This relates, in Kant’s
conception, to their being endowed with rational free will. It also relates to the Christian idea that
every human being is created by God and created in His image (Kant’s own religious background
was in Pietism, a relatively strict but very inclusive form of Lutherism), but it can be found equally
in other religions and cultures. The injunction, then, is to treat everybody with the deep respect
that their status as human beings deserves, to treat everyone as being infinitely valuable ends-in-
themselves, and never to let that respect lapse by treating them merely as means to some practical
objective.4
The injunction does not prohibit us from treating people as means. It does not necessarily
prohibit us from employing people, or enlisting their help, or persuading them to buy things from
us, or even in certain circumstances from doing them harm. But it does prohibit us from overriding
their interests or autonomy in the process. It also requires us to place higher interests, those
relating to people’s existence and growth as free-willed moral agents, above lower ones, relating to
pleasure, wealth or even happiness. To get habitually drunk, for example, would be to treat oneself
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3 The main problem students, and indeed teachers, have with this approach in practice is that it requires
exceptionally clear thinking. If you have read through the last few paragraphs without having to stop and
think and read through the arguments again, you have probably not understood them!
4 In everyday language we would probably say ‘as means to some practical end’, but for Kant the only
things worthy of being treated as ‘ends’ are human beings and their good will. The word ‘end’ in the formula
refers specifically to a human being and not to some general objective.
merely as a means to some instrumental objective (pleasure), and not, since it impairs one’s free
will, as a proper end.
As a general ethical principle, the Formula of Humanity is unusually positive. As with
most general principles its immediate force is negative – don’t treat people merely as means – but
with that ‘merely’ it relies heavily on some positive conception of what is meant by treating
someone as an end. How much respect is enough to achieve this? Kant would say complete,
infinite respect, but what that entails in practice is hard to judge. From the Kantian perspective it is
the rational intent that matters, a ‘good will’, but it is extremely difficult to judge the intent of
other people, and almost as difficult to judge our own. The Formula works in practice, however,
because in many cases people's intentions are so far from ethical, in its terms, that they leave little
room for debate. The argument that ‘my intentions are good’ when people are being abused and
exploited is often just not credible.
Contractualist and consensus ethics
One pragmatic way of exploring whether a principle might be universalisable would be to ask
whether everybody would in fact agree to it. One way of showing respect to other people would be
to consult them on one’s action and take their views into account. Neither of these approaches is
strictly Kantian. Kant’s concern was not with whether everybody could agree to something but
with whether they could rationally will it, and if one person could rationally will it then so, on his
theory, could another. His model of human interest, likewise, was quite independent of what
people might think their interests to be. But the approaches lead us to a range of contractualist or
consensus-based theories of ethics and political justice that are broadly Kantian in their inspiration
and are particularly helpful when looking at issues of corporate or public policy.
The contractualist and consensus-based approaches we shall consider here don’t go as far
as basing the ethical just on what people will agree to. It’s a common feature of the real world that
people often don’t agree, and even when they do they’re not necessarily right: they might agree
because they share the same prejudices, or the same delusions. Instead the focus is on what
reasonable people will agree to, or what people will reasonably agree to. In Thomas Scanlon’s
formulation, ‘everyone ought to follow the principles that no-one could reasonably reject’. The
question then is how to operationalise the notion of ‘reasonable’. If we assume that people in
practice have different interests, different viewpoints and different prejudices, and that they, and
we, generally lack the Kantian detachment to formulate universal laws (even if that should be
possible in theory), how might we overcome these difficulties?
The most influential form of contractualism is due to John Rawls, who invokes the device
of a ‘veil of ignorance’. Rawls asks us to consider what conclusions would be reached by rational
agents in what he calls an ‘original position’. They know that they are members of a society but,
behind the veil of ignorance, do not know what positions they occupy in that society. Nor do they
know anything about the likelihood of their occupying different positions (they are faced with
radical uncertainty in this respect), or about their own natural strengths or weaknesses.
To provide a motivational basis for people’s reasoning, but also to sharpen the ethical
problem, Rawls assumes for argument’s sake that the agents in his original position are purely self-
interested economically rational agents. He concludes, though, that under the conditions of the veil
of ignorance, it would be in their rational interest to take account of the needs of every person,
including the weakest and the most disadvantaged, because that just might be them. Specifically,
while they might favour a system that maximised total utility, they would also impose constraints
in the form of two principles of justice. Rawls’s first principle of justice states that everybody
should have an equal right to the most extensive basic liberties compatible with the same liberties
for others. The second principle requires that any inequalities in a society should be such as to be
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of the greatest benefit to its least advantaged members; and that positions of advantage in a society
should be equally and fairly open to everyone.
Rawls’s main focus was on political justice and the purpose of his theory was to derive the
basic structures of a just society. But his approach provides a useful way of looking at ethical
issues, and especially of analysing new situations in which regulatory norms and moral
conventions have yet to be developed, or have developed to suit the interests of the most powerful
actors rather than those of society at large. Beginning with a scenario involving and affecting a
variety of people in a variety of positions, we aim to establish what moral rules or conventions
would be rationally agreed to, hypothetically, by those concerned, if they did not know in advance
which position they occupied or which person they represented. The form of rationality assumed
here is essentially instrumental, so we need to assume something about their aims and objectives,
but as in some areas of economics the conclusions may not be very sensitive to the behavioural
assumptions. Because the mechanism is set up to respect the interests of others, narrow self-
interest may lead, as in the Rawls example, to quite other-oriented conclusions.
Other philosophers have sought to operationalise the idea of reasonable agreement by
focusing on the procedural aspects of real discussions and debates. The most influential of these
theories is probably the ‘discourse ethics’ of the late twentieth century German philosopher Jürgen
Habermas, but similar lines of thought also feature in the writings of the contemporary American
philosophers Amy Gutmann, Dennis Thompson and others on ‘deliberative democracy’. On both
theories a moral norm is valid only if all those affected could in practice agree to it. This does not
necessarily mean that it serves their interests or conforms to their beliefs, but they must be able to
accept that it is reasonably justifiable, at least in the circumstances and for the time being, as the
result of a debate carried out according to certain rules.
To achieve this, all those affected – or, more realistically, some representatives chosen by
or acceptable to them – must first of all be able to participate in discussion over the issue
concerned. It is not enough to have their interests represented by an armchair philosopher, trying to
work out what people would agree to under some hypothetical conditions, or by people who may
not fully understand them and so not adequately represent them. Moreover, the management of
this discussion must be such as to treat all contributions with full and equal respect. It is not
enough to allow people to ‘have their say’ – what they say must be taken account of, and
responded to. This can be challenging, especially as the very structuring of public debate and the
way in which ethical problems are classified can discriminate in favour of some interests and
against others (women or minorities, for example). This is probably not an insuperable problem,
however.
Reasonableness enters this model in the form of a requirement that all those participating
in the discussion, including those charged with a final decision but also all those who may be
affected by this decision, must give reasons for their arguments, and these reasons must be both
generally intelligible and generally acceptable. It is not acceptable for someone to impose a
decision without giving good reasons for it, but nor can anyone affected by the decision object to it
without good reason.
Finally, where deliberation fails to resolve substantial differences, the results should be
treated as provisional and subject to further scrutiny. It serves no-one’s interests to keep arguing
continually, but respect requires that where reasonable differences or doubts persist they should
not be closed off completely.
Compared with contractualist theories, theories of deliberative or discourse ethics are
more concerned with the processes by which moral norms are developed, or moral decisions
made, than with the content of those norms or decisions. The purpose is, however, to reach good
principles, by capturing in the process a full respect for other people. Moreover, in many practical
cases, process issues are a central ethical concern. This is generally the case in politics, and in all
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those situations in which there is a significant political dimension: wherever there are different and
competing interests, for example, or competing moral norms, that have somehow to be recognised
and taken into account. In contemporary society, which is characterised by cultural pluralism and
the erosion of tradition, this is very often the case.
Deliberative approaches are also helpful when social, economic and technological change
leads to the need for new moral norms or the reconsideration of old ones. Some of the most
contentious issues in contemporary morality are the product of technological developments, most
obviously in medicine and the life sciences but also in finance and business. And they are helpful
for many allocation problems. Deliberative and discourse ethics suggest, for example, that major
business decisions that differentially affect different stakeholders should be taken in a way that not
only takes account of their possible interests but also allows them to argue for these interests, and
argue for their values, in a genuine debate. There may be limits to how far this is feasible in
practice, but it ties in with the common perception that while any business has at times to make
hard decisions (decisions, for example, involving closure or redundancy, or decisions that set a
limit on health and safety or environmental protection), it matters, ethically, how those decisions
are made. Taking proper notice of people’s arguments through a deliberative process is not just a
way of building in respect but is also a demand of respect.
Virtue ethics
According to virtue ethics, what matters is the character of the actor, and by implication the
motivations of the actor, rather than the act itself or its consequences. Whereas utilitarian and
Kantian ethics develop general rules to be applied to circumstances regardless of their specifics,
virtue ethics works in the opposite direction. It looks at people’s specific responses to specific
circumstances, and judges the characters these reveal. Like the other approaches, it ends up by
making general rather than specific judgements, but inductively rather than deductively. For while
people’s characters are revealed by their actions, they are not necessarily revealed by individual
actions. To judge how ethical a fictional character is we need to read the whole novel, not just a
few pages, and the same is true of real life. We normally judge the virtue of someone not on the
basis of a single act, but on the basis of their overall behaviour, over a period of time (sometimes a
whole lifetime) and in a variety of circumstances.
Unlike utilitarianism or Kantian ethics, virtue ethics typically makes no strong theoretical
claims. It doesn’t seek to derive the virtues from first principles, but generally accepts those that
are characteristic of, and recognised within, a particular culture or community. In some versions it
serves mainly to systematise or rationalise our established social norms. The first and most famous
virtue ethicist, Confucius, argued that the traditional virtues of ancient Chinese society, such as the
virtues of loyalty and obedience, should be tempered by the core human virtues of benevolence,
justice and human-heartedness. A few generations later the founder of Western virtue ethics,
Aristotle, cast the virtues of ancient Athenian society as the temperate means between intemperate
vices. Some modern virtue ethicists have developed lists of virtues that are intended to unify and
systematise the various virtues found in different cultures, religions and traditions.
In other versions, virtue ethics is almost anti-theoretical. Most contemporary virtue
theorists argue that what is ethical depends critically on the context and specific circumstances,
and that there is a limit to how far we can usefully impose general rules on how people should act.
On this view the injunctions developed by normative ethical theories are too rigid, too insensitive
to particular circumstances, and can be counter-productive when rigorously applied, constraining
people’s ethical development and pursuit of a good life rather than advancing it.
One consequence of the emphasis virtue ethicists place on context and specific
circumstances is that the roles people occupy in society are seen as morally significant. A
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particular role is associated with particular responsibilities and obligations, and so with particular
combinations or particular applications of the virtues. Confucius wrote specifically of the virtues
appropriate to a scholar or leader (the audience to whom his work was addressed). Aristotle wrote
of those appropriate to a free (male) citizen. In contemporary society we may look for different
qualities in a child as compared with a parent, a doctor as compared with a financial trader, a
policeman as compared with a chief executive. We do not, however, develop different sets of
virtues for each role. Virtues are defined at the level of the wider social community, and in judging
the character of the person we always regard them first and foremost as members of that
community.
This is important, because the recognition in virtue ethics of the importance of roles can
lead to confusion. We might say, for example, that someone is a ‘good business negotiator’,
meaning that he is cold-blooded, ruthless and able to get what he wants, and that these qualities are
well suited to effective business negotiating, but that doesn’t make him ‘good’ in an ethical sense.
What we have to ask is not how a businessman should behave to advance his business interests,
but how a virtuous citizen should behave in a business role. If ruthless negotiating is to be justified
it has to be in terms of being a dutiful employee, or something similar, and we would also expect
this dutifulness to be weighed against other virtues, like honesty, benevolence, being a dutiful
member of society and so on.5
In a similar way, if we look at a particular institution or sub-group of society, we do not
normally allow it to invent its own virtues. The Mafia has distinctive values that set it apart from
the rest of Italian society, but we would judge the ethics of a Mafiosi according to the virtues of
Italian society, not according to the so-called virtues of Mafia society. Suicide bombers are often
portrayed by fundamentalist clerics as epitomes of virtue, but we don’t have to accept that
portrayal.
The list of generally accepted virtues varies in detail from culture to culture, but with a lot
of commonality. And although the virtues are typically expressed in terms of the traditions and
values of particular cultures, their function is to capture the best and most admirable qualities of
human nature generally.
This is most clearly expressed in Confucian ethics which urges respect for what might be
considered the social virtues of loyalty, obedience and conformity with established social duties
and rituals (xiao and li), but advocates that these be tempered and overseen by the fundamental
human virtues of justice (yi) and, especially, human-heartedness (ren), a kind of tempered love or
rational benevolence. The Western tradition, similarly, recognises four cardinal virtues that
effectively regulate all others, namely prudence, justice, temperance and fortitude. A similar role is
played in Buddhist ethics by the four divine states: loving-kindness, compassion, sympathetic joy
and equanimity. Whatever the specific virtues identified by any particular community, a virtuous
character is always, in a very general sense, both temperate and benevolent.
As we have already noted, a virtuous person is also sensitive to context: to the particular
circumstances, the particular people involved, and so on. Combining these observations, we see
that behaving virtuously is not just about acting in accordance with a list of virtues but about
balancing those virtues and applying them sensitively to the context. That the dominant virtues
might vary from culture to culture is not therefore a problem, at least in principle. We do run into
practical difficulties when cultures meet and mix. The virtues of loyalty, compassion and self-
reliance, for example, carry very different weights in Chinese, European and American societies,
and are applied in very different ways. An American may think that the Chinese take loyalty to
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5 References to duty can be very confusing, especially when Kantian ethics is described, as it often is, as an
ethics of duty. In Kant’s theory the categorical imperative imposes absolute duties as a requirement of
reason, but when we talk about duties in everyday conversation, or when we talk of people as dutiful, we are
generally referring to the dutifulness expected of a virtuous character, and not of a Kantian duty.
extremes, and a Chinese that the Americans take self-reliance to extremes. But a virtuous Chinese
is not loyal at all costs, to the exclusion of everything else. There is balance, a ‘golden mean’. And
a virtuous American does not insist on self-reliance at all costs, in all circumstances. Again there
has to be a balance and that balance will vary both according to one’s own culture and according to
the culture one is living or working in. The challenge may be greater, but it is not fundamentally
different.
In some versions, virtue ethics is closely linked with tradition, and so takes on a
conservative flavour. Whereas liberal philosophers (John Rawls, discussed above, would be an
example) tend to see communities as the creations of autonomous individuals, communitarian
philosophers see people as products of their communities, their identities inseparable from their
social context. From this perspective, the idea of an ethical life is meaningless when divorced from
the traditions that have shaped a society. There is then a temptation to identify the weakening of
moral norms characteristic of modern society, which often seems to take its values more from
economic calculations and opinion polls than from any form of ethical reflection, with a
fragmentation of community and loss of tradition, and to call for these to be revived.
Virtue ethics doesn’t have to be conservative, however. Another response to the same
problem would be that the old traditions have lost their relevance and that something new is
needed in their place. Strong traditions often impose a conformity that is every bit as insensitive to
circumstances as Kantian or utilitarian theories and one of the things virtue ethics can do is to
challenge over-rigid norms. That is, indeed, precisely how Confucius used it. It is also worth
noting here that virtuous people do not necessarily conform. A virtuous person will generally
follow the prevailing social norms, but will also know when to and how to breach them.
Because of its sensitivity to context and its commitment to looking at a situation as a
whole rather than abstracting from it, virtue ethics can provide a useful language for exploring the
shifts in ethical norms that we are already experiencing – shifts in the norms relating to sexual
activity, for example, or marriage, or familial relationships, as well as in norms relating to business
and finance. A key point here is that when we look at the ethics of a particular practice or set of
practices we are often not looking at some completely new phenomenon, but at a change in
attitude based on changing priorities and changing perceptions. If we treat sex outside marriage, to
take one example, as an act that is either right or wrong, we quickly get locked into a futile
dispute. But if we ask instead what a virtuous person would do when faced with a situation in
which sex outside marriage is a possibility, we have more room for manoeuvre. We can perhaps
think of characters, in fiction or in real life, who have chosen for the sex, even though traditional
norms weighed against it, but who nevertheless seem to be have been virtuous characters. We can
ask what it was about the circumstances that made their choice, their weighing of the alternatives,
reasonable, and to what extent such circumstances are more widely applicable. We can ask what
virtues the tradition was trying to protect, and at what cost to other virtues, and we can ask how
those virtues might best be represented in the changed circumstances of contemporary society.
Similarly when we look at the practices of one tradition set within another, as finance is
set within contemporary society, or one tradition set against another as in cross-cultural conflicts,
enquiring how a virtuous person would behave gives scope for balancing and negotiating between
the different values of the two traditions in a way that asking whether an act is right or wrong does
not.
What recommends the virtue approach in cases like these is its combined sensitivity to the
social context of community and tradition, the uniqueness of situations and the complexities of
real life. This keeps it grounded in reality and focused on the real decisions that real people have to
make, rather than on the artificial or abstract decisions of the philosophy textbook. It is not
theoretically rigorous, but that is the point. In a complex situation which theories struggle to grasp
it can sometimes help to be evidence-driven rather than theory driven – or at least to combine the
two approaches.
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Human rights
A very popular approach to ethics, both within cultures and especially across them, is that based
on human rights, as laid out for example in The Universal Declaration of Human Rights or
documents based on this, like the European Convention for the Protection of Human Rights and
Fundamental Freedoms. Indeed the language of human rights is now the dominant language for
any discussion of ethical issues across national or cultural boundaries.
The enormous recent influence of rights-based ethics seems to be at least partly due to the
power and influence of the United States of America. The language of rights was built into
American political thinking from the very beginning, and is well suited to the individualism of
American culture. The product of people escaping from hierarchical cultures and political systems,
American culture has always been suspicious of hierarchy and the moral notions of duty and
obligation that go with that, emphasizing instead the ideas of equality, individual freedom and self-
reliance. In a frontier nation, questions of property rights have also always been a central concern.
But rights also appeal to people of all cultures for the simple reason that they are positively
framed. We all want to have rights, and if you want this right and I want that right then, providing
they don’t clash unavoidably with each other, it is easy to agree that both rights should be
respected. This is in marked contrast to the traditional, hierarchical language of moral obligations
and constraints, where if I don’t like your constraints and you don’t like mine we are liable to end
up with no constraints at all. A universal declaration of human duties would probably be a non-
starter.
Focusing on rights rather than obligations has one other major advantage besides that of
facilitating cross-cultural agreement. By focusing attention on the person whose rights are
threatened it forces us to take that person seriously as an end in herself, in the Kantian sense, or as
the victim of harm, in a utilitarian calculation. Consider for example a situation in which the
activities of a powerful organisation (a company, a government agency or an elite group in the
community) are directly or indirectly causing harm to people without the power to resist. As long
as we focus on the duties of the powerful it is easy to avoid the full import of such activities. The
slave owner treats his slaves considerately. The oil company pays compensation to the
communities it is destroying. Everything seems OK. It is only when we treat those affected as
people just like us that the enormity of what is being done becomes apparent, and focusing on their
rights is one very effective way of doing this.
While a rights based approach to ethics has some clear advantages, it also has some
equally clear disadvantages. The most obvious of these has to do with the relationship between
rights and obligations. Our discussion in the last paragraph implicitly referred to ‘liberty’ rights,
such as the rights to freedom of movement, freedom of speech or freedom from torture or
oppression, or the right to use one’s property without interference. In such cases each right has a
corresponding obligation of non-interference, and one person’s right is another person’s (every
other person’s) obligation. Other rights listed in the Universal Declaration, such as the right to
participate in free and fair elections, or the right of employees to ‘periodic holidays with pay’
impose obligations on specific parties to ensure that they are upheld. Most of the rights listed are
not, however, of this kind. Usually classified as ‘welfare rights’, they specify a right to certain
goods, but do not impose a direct obligation on any specific party to provide these. Examples
include the right to a standard of living ‘adequate for the health and wellbeing of himself and his
family’, including food, clothing, housing and medical care and necessary social services; the right
to welfare provision in old age, unemployment, disability or widowhood; and the right to not only
elementary but also technical and professional education. Such ‘rights’ do not impose direct moral
obligations on any individuals, and are effectively meaningless in the absence of institutional
frameworks through which the associated obligations can be parcelled out and the goods
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delivered. It could be said that governments are under an obligation to develop societies in which
such institutional frameworks are operative, but in their absence it remains unclear what
obligations the rights of a starving person place on whom. If I come across somebody who is
starving and if I have lots of food, then I may have a moral duty to give them some – but I may
not. And if they are not starving but uneducated, then I probably don’t have an obligation to stop
and teach them – though it could be argued that in some circumstances I do.
The discussion of welfare rights in the last paragraph also serves to make the point that
although the rights listed in the Universal Declaration are presented as universal they are in fact
culturally specific. The declaration is a product of the developed world and of a specific time in
history, when the family unit was the ethical norm, women didn’t work, and the claimants of rights
could be described as ‘himself and his family’.
Another disadvantage of the language of rights in ethics is that it tends to confuse two
different concepts, one moral and the other legal. This is particularly apparent in the case of
property rights, the concept of which is legal rather than ethical in origin. Unlike most other rights,
which are claimed by those in serious need, the right to property, which is enshrined in the
Universal Declaration, is typically claimed most loudly and most forcefully by those who already
have a lot of it and who are driven by greed and acquisitiveness to hold on to it, even though
others may be starving. It used to be the bulwark of slave owners (whose slaves were their
property). Today it is used to defend the wealthy against the very tax demands that would make
possible the basic welfare rights of the poor.
Linked with the issue of property rights is that of corporate rights. In America in particular
companies are legal persons and often eager to claim the rights that go with that personhood,
including not only the right to property but also the right to free speech – which, in a television
age, they can afford much more easily than can the individuals on whose interests they trample.
A further practical problem increasingly faced by the ethics of rights is that for many
minority or disadvantaged communities (women, gays, blacks in a white society, Muslims in a
Christian society, aboriginals, and so on) individual rights may not be enough. What most of these
groups are asking for is simply to be treated with respect and dignity, and in theory this should be
achievable through individual rights. The foundational concepts of the Universal Declaration are
indeed human dignity and a spirit of brotherhood. But history casts a shadow and groups argue
quite reasonably that even though they have individual rights they are still disadvantaged by
historical prejudice. They therefore call for collective rights, and for their enforcement through
affirmative action, positive discrimination or compulsory education. The fact that such collective
rights impinge on the rights of other people is not perhaps a crucial problem: rights often appear to
conflict with each other, just as obligations do. The introduction of a further meaning of ‘rights’,
and the linking of individual Kantian ends with complex questions of identity, does however
complicate an already complicated subject.
The ethics of care
One of the achievements of the human rights movement has been to achieve greater equality for
women. In theory, the recognition of equal rights for women goes back to the utilitarians and Kant,
for whom all people were equal in value and equally deserving of respect. In practice, however,
this equality was rarely realised. The old idea that the virtues appropriate to women are different
from and in some way less than the virtues appropriate to men, which can be found not only in the
major religions but also in the more critical virtue ethics of Aristotle, was still present in the
writing of Kant and other Enlightenment philosophers. And it is still present, albeit less explicitly,
in much contemporary ethics. The French and American revolutionaries who championed the
cause of equal rights for all would not have dreamt of giving women a vote, let alone a more
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active role in government. Indeed it was only in the mid twentieth century that supposedly
advanced nations such as England and France finally allowed women to vote on the same basis as
men. In Switzerland this happened only at the end of the century. As we noted in the last chapter,
even the Universal Declaration of Human Rights has a strong gender bias.
In the last quarter of the twentieth century, in the wake of the growth of an active feminist
movement in Europe and America, a number of scholars turned their attention to the ways in
which existing ethical theories might suffer from a masculinist bias. Some writers challenged the
over-rationalistic rejection of the emotions by ethical theorists, arguing that the rationalist
calculations of utilitarianism and the emotionless rational will of Kantianism corresponded to
precisely the kind of behaviour we should not want to encourage. A truly moral society, they
maintained, would be one in which people were loving and caring, not rationally calculating.
Others pointed to the enormous gap between the theoretical idealisations of Kantian theories, in
terms of equality, universality and respect for all people, and a real world in which such ideals are
in practice quite unrealisable. Real deliberative processes, they suggested, do not give women or
other minorities equal voice. And even when the female point of view is allowed to be stated it is
too often dismissed, without any real rational engagement, as ‘irrational’. All too often the
combination of equal rights with male power (physical, cultural and economic) leads to the
oppression rather than the liberation of women. Only if ethical theory pays more attention to these
aspects of real situations, it is argued, can it hope to impact on them.
Another criticism concerns the idea of impartiality, according to which everybody, near or
far, must be treated equally in Kantian terms or counted equally in a utilitarian calculation. As we
have already noted, this runs counter to an intuitive moral sense that relationships matter, that a
parent can and should privilege the interests of her child, for example, against those of a stranger.
Finally, underpinning all these claims, is a suggestion that the characteristic focus of ethical theory
on autonomous individuals rather than on interpersonal relationships was a kind of peculiarly
masculine rationalist perversion.
The overall thrust of this feminist critique of ethical theory has been to suggest that all the
theories we have reviewed so far have, in one way or another, a masculine bias. Either they
privilege men directly, or they privilege masculine values, or they privilege peculiarly masculine
ways of thinking and reasoning. But what is the alternative?
The positive output has been the development of an ethics of care. According to the ethics
of care, to behave morally is to behave in a caring fashion, being receptive to and empathising
with the needs of others, acting with compassion, being faithful, and being trustworthy. The model
for this caring behaviour is the behaviour of a mother towards her child. However, we cannot
realistically give that level of care and attention to everyone we meet, let alone everyone in the
world. A morally caring person privileges those closest to her – children, family and close friends
– and those who are, by force of circumstances, thrust closest to her. The more that someone is
dependent on her, the greater claim they have to her care and attention. When the specific demands
of care clash with general moral rules or principles, care generally wins out: the claims of love and
compassion and the claims on our sympathy of the oppressed or disadvantaged trump claims based
on theoretical equality, rights, or total utility.
While this ethics is explicitly based on the moral experiences of women, the experiences
concerned are not necessarily restricted to women and the theory is in principle universal. Men
cannot bear and succour children, but they can care for them. They may on average be less
inclined than women to think in terms of caring relationships, and more inclined to think in terms
of abstract rules or principles, but that may just be a reflection of different cultural habits, built up
over millennia and reflecting a longstanding but ultimately artificial division of labour. With this in
mind it is not surprising that while more analytic philosophers have tended to treat the ethics of
care with suspicion, pragmatists have tended to welcome it, urging that we should at least give it a
try, and see how well it works in contemporary society.
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In many ways the ethics of care is similar to Confucian ethics. Both start from a relational
model of personal identity. Instead of being seen as atomistic individuals, people are treated as
being defined by their relationships. Both take the most intimate relationships, those of the family,
as models for ethical behaviour generally. And both hold that ethics cannot be fully captured by
general rules. Every situation is unique and every person is unique; what is ethical depends both
on the specifics of the situation and on the specifics of the relationship involved. The difference
between Confucian ethics and the ethics of care is, however, a significant one. For whereas
Confucian ethics, which is rooted in the hierarchical structure of traditional Chinese society,
privileges the relationships between men and takes as the archetypal relationship that between a
son and his father, the ethics of care takes as its archetypal relationship that between a mother and
her child. To the extent that the ethics of care is defined by its virtues, this leads to an emphasis on
the virtues of empathy and of attention and receptiveness to the (unspoken) needs of others, as
well as the more traditional virtues of compassion, fidelity and trustworthiness.
The ethics of care is not generally described as a virtue theory, and in some ways it is in
evident tension with more normal kinds of virtue ethics. It is radical rather than conservative, and
is founded directly upon experience and intuition rather than upon tradition. As in virtue ethics,
however, it is the character of a person that ultimately matters, and this is revealed not in isolated
acts but in a variety of circumstances and, especially, through its embodiment in a variety of
personal relationships.
Applying normative ethics
In discussing the various approaches to be used we have already given some indication of their
strengths and weaknesses. Choosing which approach or approaches to apply to any given problem
is often the greatest challenge facing students, however, and while there are no absolute answers it
may be helpful to set out some general guidelines.
Utilitarianism was first applied to public policy issues and that still may be where it’s most useful.
It can be applied to the evaluation of a general public policy norm (‘people should act in their
narrow economic self-interest’ would be a relevant current example); to compare regulatory
principles or policies (rules versus principles, alternative rules for setting bank’s capital ratios); to
changes in the law (the repeal of Sarbanes-Oxley); or to corporate policies (governing sales and
marketing, for example, or tax avoidance, or facilitating payments).
At the personal level, utilitarianism is normally applied to rules of behaviour or general
classes of actions rather than to individual acts. We may use straightforward act utilitarianism to
analyse specific one-off cases, where the consequences are significant, but we shall not generally
use it to provide justifications for breaking general rules in specific cases.
Utilitarianism works best when the consequences are easily identified, predicted and
measured. The closer the problem is to one in which the simple economic consequences are what
matter, the more straightforward the application. It is much harder to apply when the consequences
are hard to identify or measure, when there is a lot of uncertainty, or when non-economic factors
are important. We need to be especially careful when an action or rule carries significant costs or
suffering for minorities (or indeed for small numbers of people generally), or impacts on people’s
fundamental rights or freedoms.
Kantian ethics is often most effective when utilitarianism is least so. Like utilitarianism we use it
to analyse general rules or principles, but generally where the focus is on personal behaviour
(personal maxims), and interpersonal relationships, rather than corporate or public policy, . These
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relationships don’t have to be close. A relationship is established whenever one person’s actions
affect another person, however remotely. But the focus is on the relationship between one person
and another person as an individual person, not just as part of an agglomeration of affected people.
Kantian ethics is especially useful for looking at situations in which a person’s action
impacts on people differently (giving scope for possible discrimination), or impacts on their
fundamental rights and freedoms (possibly neglecting their value as ends), or simply disregards
them (again possibly neglecting their value as ends). In such cases, indeed, we do use it to explore
corporate or public policies, though strictly speaking the application is to the people who bring
about or implement such policies. It is generally most effective when dealing with big broad issues
and very general principles. It is generally not very effective when dealing with very specific
circumstances or with possible exceptions to general rules.
Applications of the Formula of Universal Law are always quite difficult. They are best
used for dealing with very general principles, and in using them we generally need to ignore any
specific exceptions. Once we narrow down a rule by specifying conditions, by incorporating
exceptions or by framing a rule that could only be applied in a limited range of circumstances, it
becomes extremely difficult to frame any maxim that could act as a potential universal law.
Applications of the Formula of Humanity are more straightforward, but we need to be
careful to focus tightly upon whether an action treats any people who might be affected as ends,
and not just ask whether it does them any harm. A Kantian will always try and avoid harming
people, but sometimes it is impossible to avoid harm altogether. A classic set of hypothetical
problems poses the question as to whether it is sometimes ethical to kill one person to save the
lives of many, or in various ways to allow one person to be killed to save the lines of many. Here
we can argue over what action would best respect the human beings involved. The answer isn’t
clear, but the question is a good one and in real-life situations it may be easier to answer. The
important thing to bear in mind in a Kantian analysis is that respect for persons is what matters,
not the amount of harm done.
In practice, most of the situations we look at do not pose such difficult problems and the
Formula of Humanity can be a powerful aid in thinking through many areas of business and
finance, in particular their impact on third parties – their externalities, in economic language.
Business managers have in general to generate a profit: not to do so would be to treat the primary
parties, owners, shareholders or other beneficiaries merely as means to the managers’ instrumental
objectives. (Delivering a profit might not advance their higher interests, of course, but nor would
not delivering a profit and in the absence of any more powerful considerations treating people as
ends entails respecting their autonomous choices.) In pursuing a profit they impact, often
harmfully, on other people and in an ethical analysis the interests of one group have to be weighed
somehow against those of another. Kantian ethics requires that this be done carefully, thoughtfully
and with due respect for all concerned, including all those knowingly affected, whatever their
status or voice. To take another example, one of the characteristics of the professions (which
would include accountants and, some would claim, financial analysts or consultants) is that the
knowledge and expertise of professionals give them an advantage over their clients, and the
guiding rule of professional ethics is that that advantage should not be exploited. The clients must
be treated as ends-in-themselves, and not as a means of enhancing the professional’s reputation or
bank balance.
Contractualist and consensus ethics are generally applicable to the same kinds of problems as
utilitarianism – to questions of public or corporate policy, regulation and so on. They are useful in
those cases in which utilitarianism runs into difficulties: when the consequences are hard to
identify or measure, when there are important non-economic consequences, or when there is a
significant impact on minorities. In applying Rawlsian ethics we may incorporate utilitarian
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measures, arguing that people in the original position would wish to maximise overall utility, but
subject to distributional constraints that give some protection of the less advantaged. This
approach enables us to combine broadly utilitarian objectives with a Kantian-like consideration of
people’s rights and freedoms.
Consensus ethics is not something we can apply directly in a book or classroom to get
answers to ethical questions. The whole point of it is that the answers should come from
deliberation amongst those who are actually affected. What we can do is point to situations where
the process of forming a consensus seems particularly appropriate. These might include, most
obviously, cases where those charged with framing a policy or regulation simply don’t know how
people will be subjectively affected by it, and can’t find out except through a deliberative process.
They may also include cases where there are strong indications that the people framing a policy
could have found out how it would impact on people but didn’t bother to do so, or relied on
culturally biased or prejudiced assumptions, or intentionally distorted the evidence. In some cases
we might find that the processes used had obvious flaws, or we might know enough ourselves
about affected groups to doubt the views attributed to them.
Virtue ethics is applied, like Kantian ethics, to people in their relationships with other people, and
not to corporations. But whereas Kantian ethics is applied to general rules and focuses on how
people should treat different situations according to the same rules, virtue ethics focuses on the
specifics and how people should treat different situations differently.
The application of virtue ethics is more an art than a science. What we don’t do is write
down a list of virtues and tick them off. Apart from the need to take account of exactly how the
virtues are applied in practice and of the balance between them, the approach needs to be
reflective. In the language of the social sciences the methodology is interpretive not hypothetico-
deductive. It seeks insights not demonstrations. A good virtue analysist also needs to be virtuous:
sensitive to the situations being analysed, temperate and even-handed, sympathetic towards the
actors and so on.
We noted earlier that virtue ethics is a good approach to use when looking at situations of
cultural change, where it helps us to relate the new circumstances to the old. It is also appropriate
to issues of everyday ethics, where the rightness or wrongness of particular acts is not always what
really matters. Whether at home or at work, many people’s lives are characterised by a need to
balance a variety of different responsibilities. Look at any one of the decisions made and you
would have no idea whether or not a manager was behaving morally. Look at a series of such
decisions and you can begin to judge whether they are acting fairly, prioritising responsibly, and so
on. Indeed an evaluation of whether someone’s behaviour is fair or unfair almost inevitably
requires us to look at multiple actions over a period of time, and at the balance they achieve.
Virtue ethics can also help us to understand how people might behave ethically in
particular roles. Some roles seem on the face of it to license behaviours that would normally be
considered unethical. Others impose heightened ethical responsibilities. In practice, different
characters are attracted to different roles and we tend to compare bankers with other bankers and
priests with other priests, but a careful application of virtue ethics allows us to separate the person
from the role and look at the person (citizen, member of the community) in a role. Other
approaches cannot achieve this level of subtlety.
The language of human rights is most useful when it addresses our behaviour towards those
whose interests are most easily neglected: the poor, the disabled, the discriminated against and all
those who are in some way disenfranchised. In these cases it is very often fundamental liberty
rights that are at stake, and consideration of these leads us straight to duties and obligations. The
18
Ethics and Finance
Ethical foundations
tactic of starting from rights rather than obligations may not add anything essential to a Kantian
analysis, but it focuses that analysis and points us to duties that might otherwise be neglected.
Sometimes, when it is evident that a person’s rights are being abused, it acts as a short cut to the
relevant moral obligations. In other cases, asking the question “whose rights are being affected
here” may help us to think about people we might not otherwise consider: the communities who
are indirectly affected by the operation of a chemical factory or mining operation, for example, or
by an agreement reached between political and commercial interests on industrial development,
pesticide use, press and media policies, or medical programmes.
A rights analysis will also be appropriate, quite obviously, when a key feature of the
situation being analysed is that rights are being claimed. Because of their seeming universality and
their incorporation in international law and conventions, human rights are commonly invoked to
protect vulnerable individuals or communities from governments, business corporations and other
powerful interests. In recent decades, the language of rights has becomes more and more widely
used, ethical issues have increasingly been framed by those concerned in terms of claims and
counter-claims to human rights, and while a resolution of the issue may involve a move from
rights to duties, an analysis of the rights claimed will also be necessary.
In conducting such an analysis from an ethical rather than a legal viewpoint, we need to
remember that most rights are not really universal. They are culturally specific, and conditional on
a society’s stage of economic and political development. Moreover, even liberties, such as freedom
of speech and movement, can be mutually contradictory, requiring some curtailment and
regulation if a society is to operate effectively. Not everyone can go everywhere at once, and when
free speech consists of racial abuse it can easily impinge on other, arguably more important,
freedoms.
To the extent that these contradictions and complications are avoided, moral norms based
on human rights tend to be minimalist. Requiring respect only of the most fundamental and
uncontroversial liberty rights they can set a base standard but cannot easily be used to specify what
morality requires beyond that. Codes of conduct developed from multinational corporations tend
to fall into this category, requiring the corporations not to infringe on liberty rights in the countries
in which they operate, but imposing no obligations in respect of welfare rights, despite the power
and wealth of the corporations, and making relatively weak demands in respect of how they
respond to the curtailment of rights by the governments in the countries in which they operate.
To the extent that rights-based norms seek to go beyond the minimalist, on the other hand,
they almost inevitably run into difficulties, imposing unrealistic obligations, impinging on the
recognised rights of other parties, and upsetting carefully developed checks and balances.
Like virtue ethics, the ethics of care is particularly suited to the exploration of complex situations
and of the demands of specific roles and relationships. It is rooted in people’s experience of
intimate, domestic relationships and can be applied effectively both in the domestic arena and to
situations than can in some way be seen as extrapolations of that: where people find themselves in
situations in which others are peculiarly dependent on them, for example.
The ethics of care is also valuable as a counterweight to the more orthodox ethical theories
it critiques. Whether we choose a Kantian, utilitarian or contractualist approach to an ethical
problem, it is always worth looking at how the ethics of care might be used to critique our
conclusions. Whether or not it is true to say that the orthodox theories are masculinist, they are all
the products of the same general culture and the same philosophical commitment to a fairly tight
definition of rational argument. They are also, for the most part, the products of men at their desks,
and of men who were more at home in the worlds of intellectual reasoning and introspection than
in those of feeling and sensation. Brilliant they may have been, but the great philosophers of
history could not by any stretch of the imagination be called normal, or even well-balanced. Given
19
Normative ethics
© John Hendry 2007, 2013
this context, the orthodox theories are likely to lead to very similar conclusions, and if they are
biased they are likely to be biased in the same general direction.
With its more flexible concept of reason and its greater reliance on emotional experience the ethics
of care offers a recognisably different perspective on the moral world. There is no reason to
suppose that it is any less socially conditioned, but to the extent that it too is biased it is likely to
be in a different direction. Of the ethical theories at our disposal it is perhaps the most likely to
pick up points that the orthodox theories may miss.
It is also helpful to bear in mind more generally the feminist critiques of mainstream ethical
theory, not all of which are actually embodied in the ethics of care. In particular, whenever an
analysis claims to treat people equally, whether as Kantian ends, as bearers of utility or of rights,
as participants in a hypothetical social contract or real deliberative process, we should ask whether
this is really the case, or whether the theoretical ascription of equality masks real-world
inequalities.
20
Ethics and Finance
Ethical foundations

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Normative ethics

  • 1. Normative ethics A short guide to the theories and their application Second edition John Hendry 2013 The treatments of normative ethics found in textbooks on business or professional ethics are often far too cursory, given the weight attributed to them in the course as a whole. They are sometimes unintelligible, and sometimes plain wrong. They are very rarely accompanied by any guide as to the limitations and strengths of each theory, when it is best used, or when it is best avoided. The result, all too often, is sloppy applications, and in dealing with problems of ethics sloppiness is the last thing we need. It generally matter less what particular approach someone uses than that they should use it with care and rigour. There are of course some excellent textbooks that avoid these failings, but they often don’t do what teachers want to do in other respects and it is hard to ask students to purchase two textbooks for a course they might not be that keen on anyway. There are also some excellent introductions to ethics for the general reader, some of which can be bought very cheaply. But these tend to give far more discussion than the students want or can cope with. This paper is intended for use as open access supplementary teaching material, for people who want a rigorous approach to ethics, but want for various reasons to use a textbook that doesn’t have one. A slightly more restricted version of the treatment given here, but with footnotes and full references, can be found in Chapter 3 of my 2013 book Ethics and Finance: An Introduction (Cambridge University Press). 1 Normative ethics © John Hendry 2007, 2013
  • 2. Introduction There are many varieties of normative ethics and many versions of each variety. I shall focus here on a selection of approaches that appear to be particularly useful and relevant to areas of application such as business ethics or professional ethics. My main focus will be on three sets of theories. Utilitarianism judges actions by their consequences, assessed in terms of some measure of utility. Its application typically takes the form of a kind of cost-benefit analysis, but applied to the utility function for society at large rather than to that for a particular actor. Kantian ethics focuses on the actions themselves and the principles that might be adopted to guide people in these actions, irrespective of their consequences. It suggests that people have an unconditional ethical duty to follow principles that are universalisable and that treat people as ends not means. Various kinds of Contractual and Consensus ethics, mainly rooted in Kantian ideas, identify what is ethical with what people can or could reasonably agree to. Virtue ethics focuses on the character of the actor rather than on the actions or their consequences, and equates the ethical with what a virtuous person would do in any particular situation. I shall also look very briefly at two other theories that maybe have a more limited application but provide useful counterpoints to the the main ones: the ethics of rights and the ethics of care. In the following sections I shall briefly introduce each of these approaches. In the final section I shall address the practical question of their application, looking in particular at which theory seems to work best in which circumstances. Utilitarianism According to Act Utilitarianism, any action that increases total utility across society is good and any action that decreases it is bad. To act ethically is to act so as to increase or, ideally, maximise total utility.1 This approach is intuitively attractive. It clearly captures something important about ethics, and seems to offer a wonderfully simple rational procedure for resolving ethical issues. When we try to apply it, however, we run into a range of difficulties. These don’t necessarily detract from its value as a theory. Indeed, they bring to the fore some important ethical issues that other theories fudge or ignore. But they do make it hard to apply in many circumstances. I shall discuss these under two headings: general procedural difficulties and difficulties of definition and measurement. From a procedural perspective, we often have neither the time nor the means to work out the consequences of our actions. Many ethical decisions have to be made more or less on the spot, when confronted with a difficult and unexpected situation – a fight, an intruder, a child in danger. It may simply not be practical to work out, even roughly, what the consequences might be before deciding what to do. It may not even be ethical. Stopping to calculate all the consequences before acting has consequences itself: the child in danger might die if you delay. And even in the absence of such consequences, stopping to calculate all the consequences before going to someone’s aid is not what we normally think of as ethical behaviour: in the words of philosopher Bernard Williams it's 'one thought too many' 2 Ethics and Finance Ethical foundations 1 Note that I am using ‘utility’ here in a relatively broad sense, to incorporate anything we might reasonably include in a social utility function. Some philosophers give it a much narrower meaning and would call the approach outlined here consequentialist, but not strictly utilitarian.
  • 3. Even if we set aside the time issue, calculating the future consequences of an action may simply not be feasible. When economists calculate the financial return on an investment, they normally assign probability distributions to the future values of key variables and estimate the expected return. But how do they know what probabilities to use? In most cases they don’t know, and can’t know. As a succession of leading economists have pointed out, from Frank Knight to John Maynard Keynes to Herbert Simon, the future is radically uncertain, and beyond even probabilistic calculation. Not only do we not know things, we don’t and can’t know what we don’t know. In the wake of the recent financial crisis, as many writers are beginning to stress, this problem can't be ignored. When we turn from the relatively simple problem of maximising the financial returns on an investment to the massively more complex one of maximising the utility of society as a whole, radical uncertainty becomes even more of a problem. Herbert Simon’s response to the combined problems of radical uncertainty and the limits of human cognition (even if we had the information we couldn’t possibly process it), in the context of business administration, was to argue that a rational manager would not attempt to calculate everything but would ‘satisfice’, using simplifying assumptions and procedural algorithms to reach conclusion that were good enough to work with. Contemporary utilitarians, similarly, turn to rules and algorithms to overcome the procedural problems associated with calculation. Indirect act utilitarians share something very similar to Simon’s concerns about the limitations of human cognition and forecasting. They recognise that maximising the utility consequences of every individual action is completely impracticable, and that trying to do it is likely to be counter-productive. The best way to maximise the utility of our actions, they suggest, is to critically analyse a range of typical actions; to use this analysis to develop simple guidelines as to our general behaviour; and to follow those guidelines. Sometimes the individual actions that result may not be utility-maximising, but overall this is the most effective way in practice to maximise the utility consequences of our actions. Rule utilitarians follow a very similar approach, but instead of developing guidelines or rules on the basis of the consequences of typical actions they focus on the consequences of the rules themselves. They seek to establish the general rules or social norms which, if followed by everyone, would maximise overall utility. The weight of analysis here falls on the rule, and the consequences of the general observance (or attempted observance) of one rule, or one set of rules, as compared with some alternative. The requirement for the individual actor is simply to follow the rules that have been established in this way. Like the moral norms of a culture or traditions, the rules and guidelines put forward by both indirect act utilitarians and rule utilitarians tend to be quite general and straightforward. In practical terms, they need to be internalised and followed routinely, and complex rules or rules subject to lots of explicit qualifications and exceptions would be badly suited to this purpose. This means that there will inevitably be times when we want in practice to make exceptions, when we want to say that in some exceptional cases breaking the rule is OK. We do this all the time for social norms, respecting the general rule but understanding implicitly that it might not always apply. But the point of a utilitarian analysis is to find the best rules for general application: the rules that if always followed will be best overall, taking account of the cases in which they might not give the best result but weighing these against the cases in which they do. We may in practice want to make exceptions, but this does not invalidate the general rule. In fact, the rules we get tend to correspond closely to the typical moral norms of a society: ‘don’t tell lies’, ‘don’t hurt people’, ‘don’t cheat’, etc. They tend to be very general, and they also tend, like most social norms, to be negative rather than positive. A case can also be made out for much more controversial rules, however, especially on the basis of rule utilitarianism. The rules ‘give everything you don’t actually need to the poor’, at one extreme, and ‘act according to your narrow self-interest in economic affairs’ at the other, while radically different in their implications, are both plausible candidates for utility maximising rules. 3 Normative ethics © John Hendry 2007, 2013
  • 4. The second set of difficulties with utilitarianism concerns definition and measurement. First, for utilitarianism to work in practice, there must be some broad consensus as to how utility is defined – what, in the language of economics, goes into the utility function. Is monetary wealth an adequate measure of utility, or should we also (or only) take account of happiness, or pleasure, or Amartya Sen and Martha Nussbaum’s notion of capabilities, which includes measures of freedom, human rights and equality? If pleasure counts, will any pleasure do, or only ‘healthy’ pleasures? Should we be looking only at the total sum of wealth, happiness or pleasure, or also at the ways in which these are distributed? These difficulties of definition carry with them difficulties of measurement. Even if we could agree on what properties to put into the utility equation, we might not agree on how to measure and weight them. To a large extent this is a technical issue, which complicates the application of utilitarianism but doesn’t seriously undermine it. However, it highlights a more fundamental difficulty in reaching consensus on what really counts. For example, since we have, in principle at least, to reduce all factors we take account of to some common currency in order to add them up, what price do we put on a life? Is the life of a young Wall Street banker with future expected earnings of $200 million worth times 20,000 times the life of a middle aged Indian peasant with future expected earnings of $10,000? Or is it worth exactly the same? More generally, are all lives of equal value, or are some more valuable than others? If the question were put to them in these simple terms, most people would probably say that all lives are equal, but if we look at the policies of governments and corporations around the world, many of which are framed at least partly on utilitarian grounds, we seem to find an almost universal assumption that some lives are more valuable than others. In many applications of utilitarianism these difficulties of definition and measurement are not a major problem. They don’t impact seriously on the philosophical arguments underlying the theory, and so long as we apply it carefully – making sure, for example, to take account of everybody affected by a rule,2 and to take account of the indirect effects such as the effects of setting a good or bad example or the social effects of a particular welfare distribution – we shall often reach much the same conclusion on any plausible definition or measurement of utility. There will inevitably be cases, however, that are sensitive to the measures we adopt, and others in which the definition of utility is both critical and contentious. These are, of course, the most interesting cases to explore, but they need special care. As a final general comment on utilitarianism, one of its most striking characteristics is that it is in one sense strictly egalitarian. Because it is concerned with the overall utility of the whole of society, indeed the whole world, it gives no-one any intrinsic priority. Economic calculations obscure this, but if we think of utility in terms of happiness or well-being, the utility of any one individual is in principle as important as that of any other. One consequence of this is that distant strangers, people we have never met, weigh just as heavily as people who are close to us, including ourselves. Suppose I give my mother a present on her birthday: it no doubt makes her happy, and it might make her unhappy if I didn’t do it. But for the same money I could probably save the life of a child in the developing world and it is hard to construct an application of utilitarianism under which this would not be better. Similarly, it would be very hard to justify on utilitarian grounds a policy that involved paying for private health care or private schooling in a country like Britain, when the same money could achieve far more if 4 Ethics and Finance Ethical foundations 2 A common student error is to focus only on those most immediately affected - for example, in assessing the ethics of a business policy to focus only on the consequences for the shareholders, employees and perhaps customers of the business. A utilitarian analysis in this case must also take account of the effect on the shareholders, employees and customers of the the firm’s competitors, which will often cancel out the effect on the firm itself (in competitive markets one firm’s loss is another’s gain). And it must take account of the consequences for society at large, which are generally what matter most from an ethical perspective.
  • 5. spent on health or education in the developing world. Indeed it would be hard to justify not spending far more on such things generally than we do. A recent estimate suggests that a tax of one per cent of gross domestic product on the wealthiest nations could double the incomes of the poorest two billion in developing countries. A simple act utilitarian calculation would here argue in favour of such a taxation policy, or at the very least in favour of comparable voluntary donations. To not give a little to achieve a lot would surely be unethical. Of course, nothing is quite that simple. Even if we set aside the problems of implementation, all sorts of arguments can be made about the de-motivating effects of such welfare policies, the value of individual freedom and suchlike. But here the basic calculation is so simple as to be compelling, even though most of us, when it comes to it, give our own self-interest priority over the ethical judgement. In these respects act utilitarianism, whether direct or indirect, is very demanding. For many of its advocates that is one of its attractions. But its critics contend that it goes too far: there is nothing wrong, they argue, in prioritising the interests of those close to us, or even in pursuing our own self-interest, so long as this does not actively harm other people. Rule utilitarianism is much less exposed to this criticism. One might well argue, for example, that overall utility would be maximised by rules that prioritised the well-being of one's own, family, community or society, so long as they did no active harm to others. A second consequence of egalitarianism is that act utilitarians run the risk of endorsing the maltreatment of minorities. Imagine a policy through which the welfare of the majority of a community is greatly enhanced, at the cost of the persecution or abuse of a small minority. It would take some imaginative scaling of the utility attributed to different states of well-being for this not to be good on a utilitarian calculation. But even if the sacrifice of the few for the benefit of the many may arguably be right in some cases it is surely wrong in others. As in the previous case, however, rule utilitarianism may be able to overcome the objection. A set of rules that protects the interests of minorities may well lead to greater overall utility than one that ignores them. Kantian ethics The eighteenth century philosopher Immanuel Kant set out to derive ethics in the form of a ‘categorical imperative’, or absolute demand on any human being, based only on reason and a conception of human beings as free-willed moral agents. The arguments he used are extremely difficult and not always completely convincing, but the conclusions he reached are nevertheless impressive and have remained at the heart of normative ethical debates to this day. Kant offered four different but, he claimed, equivalent formulations of the categorical imperative, two of which have been particularly influential in applied ethics. According to Kant’s Formula of Universal Law, you should Act only on a maxim (or personal principle) that you can also will (or rationally choose or impose) as a universal law. Philosophers have argued endlessly about how exactly this should be understood (the treatment given here follows Korsgaard), but it seems to capture a number of important ideas. First, it bears some relation to the ‘Golden Rule’, a moral norm that can be found in some form or another in most societies: treat other people as you would want them to treat you or, alternatively, don’t do to others what you wouldn’t want them to do to you. It is stronger than this, however, in two ways. In the first place it is universalised. It doesn’t just say ‘don’t do to Joe what 5 Normative ethics © John Hendry 2007, 2013
  • 6. you wouldn’t want Joe to do to you’, but ‘don’t do to anybody at all what you wouldn’t want someone - anyone - to do to you’. The particular relationship between you and Joe is explicitly taken out of the equation. In the second place, it refers to what you could will as a universal law, with a view to imposing it, not to what you might merely want. The criterion is meant to be objective, dependent only on reason and not on feelings, wishes or preferences. How this works is contentious, but the core of Kant's idea is that you can only will something to be a universal law if you can will it without running into any rational contradictions. Some maxims are not universalisable because they are self-defeating (we say there is a contradiction in conception). A maxim of making promises without necessarily intending to keep them, for example, if universalised, would deprive the practice of promise-making of any meaning. Expressing it another way, a universalised practice of making promises and keeping them only when it suited would defeat the purpose of the personal maxim of making promises and keeping them only when it suited, since no-one would take the promises seriously anyway. Other maxims are not universalisable because they contradict the notion of humanity from which Kant starts (in Kant’s terms there is a contradiction of will). These situations are often handled more simply by the other formulation of the categorical imperative that we shall look at below, but willing as universal a maxim of harming yourself or others, for example, or of neglecting your or their development, seems contrary to what human beings, as free-willed moral agents, are all about. There is a contradiction between the purpose of the personal maxim and the purpose of the human will. A second observation on the Formula of Universal Law is that while it is often applied to individual actions it is framed, like both rule and indirect utilitarianism, in terms of general rules, principles, maxims and indeed laws. Despite the very positive phrasing, moreover, these general rules or maxims take the characteristic form of negative injunctions: they are about what is not permissible. Even a seemingly positive duty, like a duty to help others, is derived by Kant in the form of a duty not to refrain, as a principle, from helping others. These considerations are important when it comes to application. Take, for example, the Kantian duty not to tell lies, which can be derived in the same way as the duty not to make promises without intending to keep them. Universalised lying when it suits destroys the practice of truth-telling and thwarts the very purpose of lying when it suits. Some critics argue that alternative maxims that allow for exceptions, like ‘tell lies when it suits you but not too often’ are perfectly universalisable even though clearly unethical: the 'not too often' would ensure that the practice of truth-telling was not destroyed. But a Kantian would respond that this last formulation is not what we mean by a general law or rule, whether in a Kantian or in a utilitarian context. A rule might allow for some well-defined qualifications, but not for qualifications of the 'not too often' sort. (Nor, we might say, of the 'when it suits me' sort, but since they evoke a specific purpose Kantian ethics can explicitly rule these out as leading to contradictions, in the way we have seen.) Other critics argue that the Kantian duty not to tell lies is too strict: it makes no allowance for the exceptional cases in which it would be ethical to tell a lie. As we noted earlier, all general rules are apt to be subject to exceptions. The way we deal with these in utilitarianism is by setting the benefits of a simple rule against the costs of it sometimes not working. The way we deal with them in Kantian applications is by invoking other ethical principles. So there is a duty not to tell lies but there is also a duty not to hurt people and sometimes we have to choose between these. That we have to do this suggests a weakness in the Kantian logic, but we know from the sciences and social sciences that all theories are imperfect, especially when faced with the messy reality of human life, and that they can still be very useful nevertheless. Another criticism sometimes made of the Formula of Universal Law is that it seems to prohibit maxims that seem positively good, but could not be universalised, like ‘give away all your money’ or ‘stay celibate’. If everyone gave away all their money there would be no-one left to 6 Ethics and Finance Ethical foundations
  • 7. receive it, and if everyone were celibate there would, in time, be no-one left at all. The way to avoid this difficulty is to restrict the maxims we consider, as Kant himself did, to those about what is or is not permissible. A maxim of telling lies when it suits you does not fail because of what would happen if everybody told lies all the time and nobody ever told the truth. That would dramatically change the practice of truth telling, but would not necessarily destroy it. It fails because of what would happen if people sometimes told lies and sometimes told the truth. If people sometimes gave away all their money or stayed celibate when it suited their purposes, in contrast, there would be no contradiction. The maxim 'it is not permissible to keep any of your money, for any reason' is not universalisable, but that's fine: we consider giving money away to be good for the purpose is serves, not as an end in itself. In the same way, some people's purposes are served by celibacy, others not. Summing up, while indirect utilitarianism requires us to abide by rules or principles that maximise utility, the Formula of Universal Law requires us to abide by principles that can be universally imposed without contradiction. The lists of principles that result are very similar, and very similar to the moral norms we find in most societies: don’t lie, don’t harm, don’t steal, don’t break the law, and so on. But the Kantian formula gives us a different approach that we can use when utility is hard to gauge or seems to involve treating some people (because they are in a minority, for example) differently from others.3 The other particularly influential formulation of the categorical imperative, and the one that is probably most useful in practice, is the Formula of Humanity: Treat humanity, whether in your own person or in any other person, always as an end and never merely as a means. This formulation, which derives straight from Kant’s conception of human beings, is easier to apply, but it still needs some clarification if we are to understand it and apply it properly. The underlying idea is that all human beings, whoever they are and wherever they are, are individually, each one of them, of absolute, unquantifiable value as ends in themselves. This relates, in Kant’s conception, to their being endowed with rational free will. It also relates to the Christian idea that every human being is created by God and created in His image (Kant’s own religious background was in Pietism, a relatively strict but very inclusive form of Lutherism), but it can be found equally in other religions and cultures. The injunction, then, is to treat everybody with the deep respect that their status as human beings deserves, to treat everyone as being infinitely valuable ends-in- themselves, and never to let that respect lapse by treating them merely as means to some practical objective.4 The injunction does not prohibit us from treating people as means. It does not necessarily prohibit us from employing people, or enlisting their help, or persuading them to buy things from us, or even in certain circumstances from doing them harm. But it does prohibit us from overriding their interests or autonomy in the process. It also requires us to place higher interests, those relating to people’s existence and growth as free-willed moral agents, above lower ones, relating to pleasure, wealth or even happiness. To get habitually drunk, for example, would be to treat oneself 7 Normative ethics © John Hendry 2007, 2013 3 The main problem students, and indeed teachers, have with this approach in practice is that it requires exceptionally clear thinking. If you have read through the last few paragraphs without having to stop and think and read through the arguments again, you have probably not understood them! 4 In everyday language we would probably say ‘as means to some practical end’, but for Kant the only things worthy of being treated as ‘ends’ are human beings and their good will. The word ‘end’ in the formula refers specifically to a human being and not to some general objective.
  • 8. merely as a means to some instrumental objective (pleasure), and not, since it impairs one’s free will, as a proper end. As a general ethical principle, the Formula of Humanity is unusually positive. As with most general principles its immediate force is negative – don’t treat people merely as means – but with that ‘merely’ it relies heavily on some positive conception of what is meant by treating someone as an end. How much respect is enough to achieve this? Kant would say complete, infinite respect, but what that entails in practice is hard to judge. From the Kantian perspective it is the rational intent that matters, a ‘good will’, but it is extremely difficult to judge the intent of other people, and almost as difficult to judge our own. The Formula works in practice, however, because in many cases people's intentions are so far from ethical, in its terms, that they leave little room for debate. The argument that ‘my intentions are good’ when people are being abused and exploited is often just not credible. Contractualist and consensus ethics One pragmatic way of exploring whether a principle might be universalisable would be to ask whether everybody would in fact agree to it. One way of showing respect to other people would be to consult them on one’s action and take their views into account. Neither of these approaches is strictly Kantian. Kant’s concern was not with whether everybody could agree to something but with whether they could rationally will it, and if one person could rationally will it then so, on his theory, could another. His model of human interest, likewise, was quite independent of what people might think their interests to be. But the approaches lead us to a range of contractualist or consensus-based theories of ethics and political justice that are broadly Kantian in their inspiration and are particularly helpful when looking at issues of corporate or public policy. The contractualist and consensus-based approaches we shall consider here don’t go as far as basing the ethical just on what people will agree to. It’s a common feature of the real world that people often don’t agree, and even when they do they’re not necessarily right: they might agree because they share the same prejudices, or the same delusions. Instead the focus is on what reasonable people will agree to, or what people will reasonably agree to. In Thomas Scanlon’s formulation, ‘everyone ought to follow the principles that no-one could reasonably reject’. The question then is how to operationalise the notion of ‘reasonable’. If we assume that people in practice have different interests, different viewpoints and different prejudices, and that they, and we, generally lack the Kantian detachment to formulate universal laws (even if that should be possible in theory), how might we overcome these difficulties? The most influential form of contractualism is due to John Rawls, who invokes the device of a ‘veil of ignorance’. Rawls asks us to consider what conclusions would be reached by rational agents in what he calls an ‘original position’. They know that they are members of a society but, behind the veil of ignorance, do not know what positions they occupy in that society. Nor do they know anything about the likelihood of their occupying different positions (they are faced with radical uncertainty in this respect), or about their own natural strengths or weaknesses. To provide a motivational basis for people’s reasoning, but also to sharpen the ethical problem, Rawls assumes for argument’s sake that the agents in his original position are purely self- interested economically rational agents. He concludes, though, that under the conditions of the veil of ignorance, it would be in their rational interest to take account of the needs of every person, including the weakest and the most disadvantaged, because that just might be them. Specifically, while they might favour a system that maximised total utility, they would also impose constraints in the form of two principles of justice. Rawls’s first principle of justice states that everybody should have an equal right to the most extensive basic liberties compatible with the same liberties for others. The second principle requires that any inequalities in a society should be such as to be 8 Ethics and Finance Ethical foundations
  • 9. of the greatest benefit to its least advantaged members; and that positions of advantage in a society should be equally and fairly open to everyone. Rawls’s main focus was on political justice and the purpose of his theory was to derive the basic structures of a just society. But his approach provides a useful way of looking at ethical issues, and especially of analysing new situations in which regulatory norms and moral conventions have yet to be developed, or have developed to suit the interests of the most powerful actors rather than those of society at large. Beginning with a scenario involving and affecting a variety of people in a variety of positions, we aim to establish what moral rules or conventions would be rationally agreed to, hypothetically, by those concerned, if they did not know in advance which position they occupied or which person they represented. The form of rationality assumed here is essentially instrumental, so we need to assume something about their aims and objectives, but as in some areas of economics the conclusions may not be very sensitive to the behavioural assumptions. Because the mechanism is set up to respect the interests of others, narrow self- interest may lead, as in the Rawls example, to quite other-oriented conclusions. Other philosophers have sought to operationalise the idea of reasonable agreement by focusing on the procedural aspects of real discussions and debates. The most influential of these theories is probably the ‘discourse ethics’ of the late twentieth century German philosopher Jürgen Habermas, but similar lines of thought also feature in the writings of the contemporary American philosophers Amy Gutmann, Dennis Thompson and others on ‘deliberative democracy’. On both theories a moral norm is valid only if all those affected could in practice agree to it. This does not necessarily mean that it serves their interests or conforms to their beliefs, but they must be able to accept that it is reasonably justifiable, at least in the circumstances and for the time being, as the result of a debate carried out according to certain rules. To achieve this, all those affected – or, more realistically, some representatives chosen by or acceptable to them – must first of all be able to participate in discussion over the issue concerned. It is not enough to have their interests represented by an armchair philosopher, trying to work out what people would agree to under some hypothetical conditions, or by people who may not fully understand them and so not adequately represent them. Moreover, the management of this discussion must be such as to treat all contributions with full and equal respect. It is not enough to allow people to ‘have their say’ – what they say must be taken account of, and responded to. This can be challenging, especially as the very structuring of public debate and the way in which ethical problems are classified can discriminate in favour of some interests and against others (women or minorities, for example). This is probably not an insuperable problem, however. Reasonableness enters this model in the form of a requirement that all those participating in the discussion, including those charged with a final decision but also all those who may be affected by this decision, must give reasons for their arguments, and these reasons must be both generally intelligible and generally acceptable. It is not acceptable for someone to impose a decision without giving good reasons for it, but nor can anyone affected by the decision object to it without good reason. Finally, where deliberation fails to resolve substantial differences, the results should be treated as provisional and subject to further scrutiny. It serves no-one’s interests to keep arguing continually, but respect requires that where reasonable differences or doubts persist they should not be closed off completely. Compared with contractualist theories, theories of deliberative or discourse ethics are more concerned with the processes by which moral norms are developed, or moral decisions made, than with the content of those norms or decisions. The purpose is, however, to reach good principles, by capturing in the process a full respect for other people. Moreover, in many practical cases, process issues are a central ethical concern. This is generally the case in politics, and in all 9 Normative ethics © John Hendry 2007, 2013
  • 10. those situations in which there is a significant political dimension: wherever there are different and competing interests, for example, or competing moral norms, that have somehow to be recognised and taken into account. In contemporary society, which is characterised by cultural pluralism and the erosion of tradition, this is very often the case. Deliberative approaches are also helpful when social, economic and technological change leads to the need for new moral norms or the reconsideration of old ones. Some of the most contentious issues in contemporary morality are the product of technological developments, most obviously in medicine and the life sciences but also in finance and business. And they are helpful for many allocation problems. Deliberative and discourse ethics suggest, for example, that major business decisions that differentially affect different stakeholders should be taken in a way that not only takes account of their possible interests but also allows them to argue for these interests, and argue for their values, in a genuine debate. There may be limits to how far this is feasible in practice, but it ties in with the common perception that while any business has at times to make hard decisions (decisions, for example, involving closure or redundancy, or decisions that set a limit on health and safety or environmental protection), it matters, ethically, how those decisions are made. Taking proper notice of people’s arguments through a deliberative process is not just a way of building in respect but is also a demand of respect. Virtue ethics According to virtue ethics, what matters is the character of the actor, and by implication the motivations of the actor, rather than the act itself or its consequences. Whereas utilitarian and Kantian ethics develop general rules to be applied to circumstances regardless of their specifics, virtue ethics works in the opposite direction. It looks at people’s specific responses to specific circumstances, and judges the characters these reveal. Like the other approaches, it ends up by making general rather than specific judgements, but inductively rather than deductively. For while people’s characters are revealed by their actions, they are not necessarily revealed by individual actions. To judge how ethical a fictional character is we need to read the whole novel, not just a few pages, and the same is true of real life. We normally judge the virtue of someone not on the basis of a single act, but on the basis of their overall behaviour, over a period of time (sometimes a whole lifetime) and in a variety of circumstances. Unlike utilitarianism or Kantian ethics, virtue ethics typically makes no strong theoretical claims. It doesn’t seek to derive the virtues from first principles, but generally accepts those that are characteristic of, and recognised within, a particular culture or community. In some versions it serves mainly to systematise or rationalise our established social norms. The first and most famous virtue ethicist, Confucius, argued that the traditional virtues of ancient Chinese society, such as the virtues of loyalty and obedience, should be tempered by the core human virtues of benevolence, justice and human-heartedness. A few generations later the founder of Western virtue ethics, Aristotle, cast the virtues of ancient Athenian society as the temperate means between intemperate vices. Some modern virtue ethicists have developed lists of virtues that are intended to unify and systematise the various virtues found in different cultures, religions and traditions. In other versions, virtue ethics is almost anti-theoretical. Most contemporary virtue theorists argue that what is ethical depends critically on the context and specific circumstances, and that there is a limit to how far we can usefully impose general rules on how people should act. On this view the injunctions developed by normative ethical theories are too rigid, too insensitive to particular circumstances, and can be counter-productive when rigorously applied, constraining people’s ethical development and pursuit of a good life rather than advancing it. One consequence of the emphasis virtue ethicists place on context and specific circumstances is that the roles people occupy in society are seen as morally significant. A 10 Ethics and Finance Ethical foundations
  • 11. particular role is associated with particular responsibilities and obligations, and so with particular combinations or particular applications of the virtues. Confucius wrote specifically of the virtues appropriate to a scholar or leader (the audience to whom his work was addressed). Aristotle wrote of those appropriate to a free (male) citizen. In contemporary society we may look for different qualities in a child as compared with a parent, a doctor as compared with a financial trader, a policeman as compared with a chief executive. We do not, however, develop different sets of virtues for each role. Virtues are defined at the level of the wider social community, and in judging the character of the person we always regard them first and foremost as members of that community. This is important, because the recognition in virtue ethics of the importance of roles can lead to confusion. We might say, for example, that someone is a ‘good business negotiator’, meaning that he is cold-blooded, ruthless and able to get what he wants, and that these qualities are well suited to effective business negotiating, but that doesn’t make him ‘good’ in an ethical sense. What we have to ask is not how a businessman should behave to advance his business interests, but how a virtuous citizen should behave in a business role. If ruthless negotiating is to be justified it has to be in terms of being a dutiful employee, or something similar, and we would also expect this dutifulness to be weighed against other virtues, like honesty, benevolence, being a dutiful member of society and so on.5 In a similar way, if we look at a particular institution or sub-group of society, we do not normally allow it to invent its own virtues. The Mafia has distinctive values that set it apart from the rest of Italian society, but we would judge the ethics of a Mafiosi according to the virtues of Italian society, not according to the so-called virtues of Mafia society. Suicide bombers are often portrayed by fundamentalist clerics as epitomes of virtue, but we don’t have to accept that portrayal. The list of generally accepted virtues varies in detail from culture to culture, but with a lot of commonality. And although the virtues are typically expressed in terms of the traditions and values of particular cultures, their function is to capture the best and most admirable qualities of human nature generally. This is most clearly expressed in Confucian ethics which urges respect for what might be considered the social virtues of loyalty, obedience and conformity with established social duties and rituals (xiao and li), but advocates that these be tempered and overseen by the fundamental human virtues of justice (yi) and, especially, human-heartedness (ren), a kind of tempered love or rational benevolence. The Western tradition, similarly, recognises four cardinal virtues that effectively regulate all others, namely prudence, justice, temperance and fortitude. A similar role is played in Buddhist ethics by the four divine states: loving-kindness, compassion, sympathetic joy and equanimity. Whatever the specific virtues identified by any particular community, a virtuous character is always, in a very general sense, both temperate and benevolent. As we have already noted, a virtuous person is also sensitive to context: to the particular circumstances, the particular people involved, and so on. Combining these observations, we see that behaving virtuously is not just about acting in accordance with a list of virtues but about balancing those virtues and applying them sensitively to the context. That the dominant virtues might vary from culture to culture is not therefore a problem, at least in principle. We do run into practical difficulties when cultures meet and mix. The virtues of loyalty, compassion and self- reliance, for example, carry very different weights in Chinese, European and American societies, and are applied in very different ways. An American may think that the Chinese take loyalty to 11 Normative ethics © John Hendry 2007, 2013 5 References to duty can be very confusing, especially when Kantian ethics is described, as it often is, as an ethics of duty. In Kant’s theory the categorical imperative imposes absolute duties as a requirement of reason, but when we talk about duties in everyday conversation, or when we talk of people as dutiful, we are generally referring to the dutifulness expected of a virtuous character, and not of a Kantian duty.
  • 12. extremes, and a Chinese that the Americans take self-reliance to extremes. But a virtuous Chinese is not loyal at all costs, to the exclusion of everything else. There is balance, a ‘golden mean’. And a virtuous American does not insist on self-reliance at all costs, in all circumstances. Again there has to be a balance and that balance will vary both according to one’s own culture and according to the culture one is living or working in. The challenge may be greater, but it is not fundamentally different. In some versions, virtue ethics is closely linked with tradition, and so takes on a conservative flavour. Whereas liberal philosophers (John Rawls, discussed above, would be an example) tend to see communities as the creations of autonomous individuals, communitarian philosophers see people as products of their communities, their identities inseparable from their social context. From this perspective, the idea of an ethical life is meaningless when divorced from the traditions that have shaped a society. There is then a temptation to identify the weakening of moral norms characteristic of modern society, which often seems to take its values more from economic calculations and opinion polls than from any form of ethical reflection, with a fragmentation of community and loss of tradition, and to call for these to be revived. Virtue ethics doesn’t have to be conservative, however. Another response to the same problem would be that the old traditions have lost their relevance and that something new is needed in their place. Strong traditions often impose a conformity that is every bit as insensitive to circumstances as Kantian or utilitarian theories and one of the things virtue ethics can do is to challenge over-rigid norms. That is, indeed, precisely how Confucius used it. It is also worth noting here that virtuous people do not necessarily conform. A virtuous person will generally follow the prevailing social norms, but will also know when to and how to breach them. Because of its sensitivity to context and its commitment to looking at a situation as a whole rather than abstracting from it, virtue ethics can provide a useful language for exploring the shifts in ethical norms that we are already experiencing – shifts in the norms relating to sexual activity, for example, or marriage, or familial relationships, as well as in norms relating to business and finance. A key point here is that when we look at the ethics of a particular practice or set of practices we are often not looking at some completely new phenomenon, but at a change in attitude based on changing priorities and changing perceptions. If we treat sex outside marriage, to take one example, as an act that is either right or wrong, we quickly get locked into a futile dispute. But if we ask instead what a virtuous person would do when faced with a situation in which sex outside marriage is a possibility, we have more room for manoeuvre. We can perhaps think of characters, in fiction or in real life, who have chosen for the sex, even though traditional norms weighed against it, but who nevertheless seem to be have been virtuous characters. We can ask what it was about the circumstances that made their choice, their weighing of the alternatives, reasonable, and to what extent such circumstances are more widely applicable. We can ask what virtues the tradition was trying to protect, and at what cost to other virtues, and we can ask how those virtues might best be represented in the changed circumstances of contemporary society. Similarly when we look at the practices of one tradition set within another, as finance is set within contemporary society, or one tradition set against another as in cross-cultural conflicts, enquiring how a virtuous person would behave gives scope for balancing and negotiating between the different values of the two traditions in a way that asking whether an act is right or wrong does not. What recommends the virtue approach in cases like these is its combined sensitivity to the social context of community and tradition, the uniqueness of situations and the complexities of real life. This keeps it grounded in reality and focused on the real decisions that real people have to make, rather than on the artificial or abstract decisions of the philosophy textbook. It is not theoretically rigorous, but that is the point. In a complex situation which theories struggle to grasp it can sometimes help to be evidence-driven rather than theory driven – or at least to combine the two approaches. 12 Ethics and Finance Ethical foundations
  • 13. Human rights A very popular approach to ethics, both within cultures and especially across them, is that based on human rights, as laid out for example in The Universal Declaration of Human Rights or documents based on this, like the European Convention for the Protection of Human Rights and Fundamental Freedoms. Indeed the language of human rights is now the dominant language for any discussion of ethical issues across national or cultural boundaries. The enormous recent influence of rights-based ethics seems to be at least partly due to the power and influence of the United States of America. The language of rights was built into American political thinking from the very beginning, and is well suited to the individualism of American culture. The product of people escaping from hierarchical cultures and political systems, American culture has always been suspicious of hierarchy and the moral notions of duty and obligation that go with that, emphasizing instead the ideas of equality, individual freedom and self- reliance. In a frontier nation, questions of property rights have also always been a central concern. But rights also appeal to people of all cultures for the simple reason that they are positively framed. We all want to have rights, and if you want this right and I want that right then, providing they don’t clash unavoidably with each other, it is easy to agree that both rights should be respected. This is in marked contrast to the traditional, hierarchical language of moral obligations and constraints, where if I don’t like your constraints and you don’t like mine we are liable to end up with no constraints at all. A universal declaration of human duties would probably be a non- starter. Focusing on rights rather than obligations has one other major advantage besides that of facilitating cross-cultural agreement. By focusing attention on the person whose rights are threatened it forces us to take that person seriously as an end in herself, in the Kantian sense, or as the victim of harm, in a utilitarian calculation. Consider for example a situation in which the activities of a powerful organisation (a company, a government agency or an elite group in the community) are directly or indirectly causing harm to people without the power to resist. As long as we focus on the duties of the powerful it is easy to avoid the full import of such activities. The slave owner treats his slaves considerately. The oil company pays compensation to the communities it is destroying. Everything seems OK. It is only when we treat those affected as people just like us that the enormity of what is being done becomes apparent, and focusing on their rights is one very effective way of doing this. While a rights based approach to ethics has some clear advantages, it also has some equally clear disadvantages. The most obvious of these has to do with the relationship between rights and obligations. Our discussion in the last paragraph implicitly referred to ‘liberty’ rights, such as the rights to freedom of movement, freedom of speech or freedom from torture or oppression, or the right to use one’s property without interference. In such cases each right has a corresponding obligation of non-interference, and one person’s right is another person’s (every other person’s) obligation. Other rights listed in the Universal Declaration, such as the right to participate in free and fair elections, or the right of employees to ‘periodic holidays with pay’ impose obligations on specific parties to ensure that they are upheld. Most of the rights listed are not, however, of this kind. Usually classified as ‘welfare rights’, they specify a right to certain goods, but do not impose a direct obligation on any specific party to provide these. Examples include the right to a standard of living ‘adequate for the health and wellbeing of himself and his family’, including food, clothing, housing and medical care and necessary social services; the right to welfare provision in old age, unemployment, disability or widowhood; and the right to not only elementary but also technical and professional education. Such ‘rights’ do not impose direct moral obligations on any individuals, and are effectively meaningless in the absence of institutional frameworks through which the associated obligations can be parcelled out and the goods 13 Normative ethics © John Hendry 2007, 2013
  • 14. delivered. It could be said that governments are under an obligation to develop societies in which such institutional frameworks are operative, but in their absence it remains unclear what obligations the rights of a starving person place on whom. If I come across somebody who is starving and if I have lots of food, then I may have a moral duty to give them some – but I may not. And if they are not starving but uneducated, then I probably don’t have an obligation to stop and teach them – though it could be argued that in some circumstances I do. The discussion of welfare rights in the last paragraph also serves to make the point that although the rights listed in the Universal Declaration are presented as universal they are in fact culturally specific. The declaration is a product of the developed world and of a specific time in history, when the family unit was the ethical norm, women didn’t work, and the claimants of rights could be described as ‘himself and his family’. Another disadvantage of the language of rights in ethics is that it tends to confuse two different concepts, one moral and the other legal. This is particularly apparent in the case of property rights, the concept of which is legal rather than ethical in origin. Unlike most other rights, which are claimed by those in serious need, the right to property, which is enshrined in the Universal Declaration, is typically claimed most loudly and most forcefully by those who already have a lot of it and who are driven by greed and acquisitiveness to hold on to it, even though others may be starving. It used to be the bulwark of slave owners (whose slaves were their property). Today it is used to defend the wealthy against the very tax demands that would make possible the basic welfare rights of the poor. Linked with the issue of property rights is that of corporate rights. In America in particular companies are legal persons and often eager to claim the rights that go with that personhood, including not only the right to property but also the right to free speech – which, in a television age, they can afford much more easily than can the individuals on whose interests they trample. A further practical problem increasingly faced by the ethics of rights is that for many minority or disadvantaged communities (women, gays, blacks in a white society, Muslims in a Christian society, aboriginals, and so on) individual rights may not be enough. What most of these groups are asking for is simply to be treated with respect and dignity, and in theory this should be achievable through individual rights. The foundational concepts of the Universal Declaration are indeed human dignity and a spirit of brotherhood. But history casts a shadow and groups argue quite reasonably that even though they have individual rights they are still disadvantaged by historical prejudice. They therefore call for collective rights, and for their enforcement through affirmative action, positive discrimination or compulsory education. The fact that such collective rights impinge on the rights of other people is not perhaps a crucial problem: rights often appear to conflict with each other, just as obligations do. The introduction of a further meaning of ‘rights’, and the linking of individual Kantian ends with complex questions of identity, does however complicate an already complicated subject. The ethics of care One of the achievements of the human rights movement has been to achieve greater equality for women. In theory, the recognition of equal rights for women goes back to the utilitarians and Kant, for whom all people were equal in value and equally deserving of respect. In practice, however, this equality was rarely realised. The old idea that the virtues appropriate to women are different from and in some way less than the virtues appropriate to men, which can be found not only in the major religions but also in the more critical virtue ethics of Aristotle, was still present in the writing of Kant and other Enlightenment philosophers. And it is still present, albeit less explicitly, in much contemporary ethics. The French and American revolutionaries who championed the cause of equal rights for all would not have dreamt of giving women a vote, let alone a more 14 Ethics and Finance Ethical foundations
  • 15. active role in government. Indeed it was only in the mid twentieth century that supposedly advanced nations such as England and France finally allowed women to vote on the same basis as men. In Switzerland this happened only at the end of the century. As we noted in the last chapter, even the Universal Declaration of Human Rights has a strong gender bias. In the last quarter of the twentieth century, in the wake of the growth of an active feminist movement in Europe and America, a number of scholars turned their attention to the ways in which existing ethical theories might suffer from a masculinist bias. Some writers challenged the over-rationalistic rejection of the emotions by ethical theorists, arguing that the rationalist calculations of utilitarianism and the emotionless rational will of Kantianism corresponded to precisely the kind of behaviour we should not want to encourage. A truly moral society, they maintained, would be one in which people were loving and caring, not rationally calculating. Others pointed to the enormous gap between the theoretical idealisations of Kantian theories, in terms of equality, universality and respect for all people, and a real world in which such ideals are in practice quite unrealisable. Real deliberative processes, they suggested, do not give women or other minorities equal voice. And even when the female point of view is allowed to be stated it is too often dismissed, without any real rational engagement, as ‘irrational’. All too often the combination of equal rights with male power (physical, cultural and economic) leads to the oppression rather than the liberation of women. Only if ethical theory pays more attention to these aspects of real situations, it is argued, can it hope to impact on them. Another criticism concerns the idea of impartiality, according to which everybody, near or far, must be treated equally in Kantian terms or counted equally in a utilitarian calculation. As we have already noted, this runs counter to an intuitive moral sense that relationships matter, that a parent can and should privilege the interests of her child, for example, against those of a stranger. Finally, underpinning all these claims, is a suggestion that the characteristic focus of ethical theory on autonomous individuals rather than on interpersonal relationships was a kind of peculiarly masculine rationalist perversion. The overall thrust of this feminist critique of ethical theory has been to suggest that all the theories we have reviewed so far have, in one way or another, a masculine bias. Either they privilege men directly, or they privilege masculine values, or they privilege peculiarly masculine ways of thinking and reasoning. But what is the alternative? The positive output has been the development of an ethics of care. According to the ethics of care, to behave morally is to behave in a caring fashion, being receptive to and empathising with the needs of others, acting with compassion, being faithful, and being trustworthy. The model for this caring behaviour is the behaviour of a mother towards her child. However, we cannot realistically give that level of care and attention to everyone we meet, let alone everyone in the world. A morally caring person privileges those closest to her – children, family and close friends – and those who are, by force of circumstances, thrust closest to her. The more that someone is dependent on her, the greater claim they have to her care and attention. When the specific demands of care clash with general moral rules or principles, care generally wins out: the claims of love and compassion and the claims on our sympathy of the oppressed or disadvantaged trump claims based on theoretical equality, rights, or total utility. While this ethics is explicitly based on the moral experiences of women, the experiences concerned are not necessarily restricted to women and the theory is in principle universal. Men cannot bear and succour children, but they can care for them. They may on average be less inclined than women to think in terms of caring relationships, and more inclined to think in terms of abstract rules or principles, but that may just be a reflection of different cultural habits, built up over millennia and reflecting a longstanding but ultimately artificial division of labour. With this in mind it is not surprising that while more analytic philosophers have tended to treat the ethics of care with suspicion, pragmatists have tended to welcome it, urging that we should at least give it a try, and see how well it works in contemporary society. 15 Normative ethics © John Hendry 2007, 2013
  • 16. In many ways the ethics of care is similar to Confucian ethics. Both start from a relational model of personal identity. Instead of being seen as atomistic individuals, people are treated as being defined by their relationships. Both take the most intimate relationships, those of the family, as models for ethical behaviour generally. And both hold that ethics cannot be fully captured by general rules. Every situation is unique and every person is unique; what is ethical depends both on the specifics of the situation and on the specifics of the relationship involved. The difference between Confucian ethics and the ethics of care is, however, a significant one. For whereas Confucian ethics, which is rooted in the hierarchical structure of traditional Chinese society, privileges the relationships between men and takes as the archetypal relationship that between a son and his father, the ethics of care takes as its archetypal relationship that between a mother and her child. To the extent that the ethics of care is defined by its virtues, this leads to an emphasis on the virtues of empathy and of attention and receptiveness to the (unspoken) needs of others, as well as the more traditional virtues of compassion, fidelity and trustworthiness. The ethics of care is not generally described as a virtue theory, and in some ways it is in evident tension with more normal kinds of virtue ethics. It is radical rather than conservative, and is founded directly upon experience and intuition rather than upon tradition. As in virtue ethics, however, it is the character of a person that ultimately matters, and this is revealed not in isolated acts but in a variety of circumstances and, especially, through its embodiment in a variety of personal relationships. Applying normative ethics In discussing the various approaches to be used we have already given some indication of their strengths and weaknesses. Choosing which approach or approaches to apply to any given problem is often the greatest challenge facing students, however, and while there are no absolute answers it may be helpful to set out some general guidelines. Utilitarianism was first applied to public policy issues and that still may be where it’s most useful. It can be applied to the evaluation of a general public policy norm (‘people should act in their narrow economic self-interest’ would be a relevant current example); to compare regulatory principles or policies (rules versus principles, alternative rules for setting bank’s capital ratios); to changes in the law (the repeal of Sarbanes-Oxley); or to corporate policies (governing sales and marketing, for example, or tax avoidance, or facilitating payments). At the personal level, utilitarianism is normally applied to rules of behaviour or general classes of actions rather than to individual acts. We may use straightforward act utilitarianism to analyse specific one-off cases, where the consequences are significant, but we shall not generally use it to provide justifications for breaking general rules in specific cases. Utilitarianism works best when the consequences are easily identified, predicted and measured. The closer the problem is to one in which the simple economic consequences are what matter, the more straightforward the application. It is much harder to apply when the consequences are hard to identify or measure, when there is a lot of uncertainty, or when non-economic factors are important. We need to be especially careful when an action or rule carries significant costs or suffering for minorities (or indeed for small numbers of people generally), or impacts on people’s fundamental rights or freedoms. Kantian ethics is often most effective when utilitarianism is least so. Like utilitarianism we use it to analyse general rules or principles, but generally where the focus is on personal behaviour (personal maxims), and interpersonal relationships, rather than corporate or public policy, . These 16 Ethics and Finance Ethical foundations
  • 17. relationships don’t have to be close. A relationship is established whenever one person’s actions affect another person, however remotely. But the focus is on the relationship between one person and another person as an individual person, not just as part of an agglomeration of affected people. Kantian ethics is especially useful for looking at situations in which a person’s action impacts on people differently (giving scope for possible discrimination), or impacts on their fundamental rights and freedoms (possibly neglecting their value as ends), or simply disregards them (again possibly neglecting their value as ends). In such cases, indeed, we do use it to explore corporate or public policies, though strictly speaking the application is to the people who bring about or implement such policies. It is generally most effective when dealing with big broad issues and very general principles. It is generally not very effective when dealing with very specific circumstances or with possible exceptions to general rules. Applications of the Formula of Universal Law are always quite difficult. They are best used for dealing with very general principles, and in using them we generally need to ignore any specific exceptions. Once we narrow down a rule by specifying conditions, by incorporating exceptions or by framing a rule that could only be applied in a limited range of circumstances, it becomes extremely difficult to frame any maxim that could act as a potential universal law. Applications of the Formula of Humanity are more straightforward, but we need to be careful to focus tightly upon whether an action treats any people who might be affected as ends, and not just ask whether it does them any harm. A Kantian will always try and avoid harming people, but sometimes it is impossible to avoid harm altogether. A classic set of hypothetical problems poses the question as to whether it is sometimes ethical to kill one person to save the lives of many, or in various ways to allow one person to be killed to save the lines of many. Here we can argue over what action would best respect the human beings involved. The answer isn’t clear, but the question is a good one and in real-life situations it may be easier to answer. The important thing to bear in mind in a Kantian analysis is that respect for persons is what matters, not the amount of harm done. In practice, most of the situations we look at do not pose such difficult problems and the Formula of Humanity can be a powerful aid in thinking through many areas of business and finance, in particular their impact on third parties – their externalities, in economic language. Business managers have in general to generate a profit: not to do so would be to treat the primary parties, owners, shareholders or other beneficiaries merely as means to the managers’ instrumental objectives. (Delivering a profit might not advance their higher interests, of course, but nor would not delivering a profit and in the absence of any more powerful considerations treating people as ends entails respecting their autonomous choices.) In pursuing a profit they impact, often harmfully, on other people and in an ethical analysis the interests of one group have to be weighed somehow against those of another. Kantian ethics requires that this be done carefully, thoughtfully and with due respect for all concerned, including all those knowingly affected, whatever their status or voice. To take another example, one of the characteristics of the professions (which would include accountants and, some would claim, financial analysts or consultants) is that the knowledge and expertise of professionals give them an advantage over their clients, and the guiding rule of professional ethics is that that advantage should not be exploited. The clients must be treated as ends-in-themselves, and not as a means of enhancing the professional’s reputation or bank balance. Contractualist and consensus ethics are generally applicable to the same kinds of problems as utilitarianism – to questions of public or corporate policy, regulation and so on. They are useful in those cases in which utilitarianism runs into difficulties: when the consequences are hard to identify or measure, when there are important non-economic consequences, or when there is a significant impact on minorities. In applying Rawlsian ethics we may incorporate utilitarian 17 Normative ethics © John Hendry 2007, 2013
  • 18. measures, arguing that people in the original position would wish to maximise overall utility, but subject to distributional constraints that give some protection of the less advantaged. This approach enables us to combine broadly utilitarian objectives with a Kantian-like consideration of people’s rights and freedoms. Consensus ethics is not something we can apply directly in a book or classroom to get answers to ethical questions. The whole point of it is that the answers should come from deliberation amongst those who are actually affected. What we can do is point to situations where the process of forming a consensus seems particularly appropriate. These might include, most obviously, cases where those charged with framing a policy or regulation simply don’t know how people will be subjectively affected by it, and can’t find out except through a deliberative process. They may also include cases where there are strong indications that the people framing a policy could have found out how it would impact on people but didn’t bother to do so, or relied on culturally biased or prejudiced assumptions, or intentionally distorted the evidence. In some cases we might find that the processes used had obvious flaws, or we might know enough ourselves about affected groups to doubt the views attributed to them. Virtue ethics is applied, like Kantian ethics, to people in their relationships with other people, and not to corporations. But whereas Kantian ethics is applied to general rules and focuses on how people should treat different situations according to the same rules, virtue ethics focuses on the specifics and how people should treat different situations differently. The application of virtue ethics is more an art than a science. What we don’t do is write down a list of virtues and tick them off. Apart from the need to take account of exactly how the virtues are applied in practice and of the balance between them, the approach needs to be reflective. In the language of the social sciences the methodology is interpretive not hypothetico- deductive. It seeks insights not demonstrations. A good virtue analysist also needs to be virtuous: sensitive to the situations being analysed, temperate and even-handed, sympathetic towards the actors and so on. We noted earlier that virtue ethics is a good approach to use when looking at situations of cultural change, where it helps us to relate the new circumstances to the old. It is also appropriate to issues of everyday ethics, where the rightness or wrongness of particular acts is not always what really matters. Whether at home or at work, many people’s lives are characterised by a need to balance a variety of different responsibilities. Look at any one of the decisions made and you would have no idea whether or not a manager was behaving morally. Look at a series of such decisions and you can begin to judge whether they are acting fairly, prioritising responsibly, and so on. Indeed an evaluation of whether someone’s behaviour is fair or unfair almost inevitably requires us to look at multiple actions over a period of time, and at the balance they achieve. Virtue ethics can also help us to understand how people might behave ethically in particular roles. Some roles seem on the face of it to license behaviours that would normally be considered unethical. Others impose heightened ethical responsibilities. In practice, different characters are attracted to different roles and we tend to compare bankers with other bankers and priests with other priests, but a careful application of virtue ethics allows us to separate the person from the role and look at the person (citizen, member of the community) in a role. Other approaches cannot achieve this level of subtlety. The language of human rights is most useful when it addresses our behaviour towards those whose interests are most easily neglected: the poor, the disabled, the discriminated against and all those who are in some way disenfranchised. In these cases it is very often fundamental liberty rights that are at stake, and consideration of these leads us straight to duties and obligations. The 18 Ethics and Finance Ethical foundations
  • 19. tactic of starting from rights rather than obligations may not add anything essential to a Kantian analysis, but it focuses that analysis and points us to duties that might otherwise be neglected. Sometimes, when it is evident that a person’s rights are being abused, it acts as a short cut to the relevant moral obligations. In other cases, asking the question “whose rights are being affected here” may help us to think about people we might not otherwise consider: the communities who are indirectly affected by the operation of a chemical factory or mining operation, for example, or by an agreement reached between political and commercial interests on industrial development, pesticide use, press and media policies, or medical programmes. A rights analysis will also be appropriate, quite obviously, when a key feature of the situation being analysed is that rights are being claimed. Because of their seeming universality and their incorporation in international law and conventions, human rights are commonly invoked to protect vulnerable individuals or communities from governments, business corporations and other powerful interests. In recent decades, the language of rights has becomes more and more widely used, ethical issues have increasingly been framed by those concerned in terms of claims and counter-claims to human rights, and while a resolution of the issue may involve a move from rights to duties, an analysis of the rights claimed will also be necessary. In conducting such an analysis from an ethical rather than a legal viewpoint, we need to remember that most rights are not really universal. They are culturally specific, and conditional on a society’s stage of economic and political development. Moreover, even liberties, such as freedom of speech and movement, can be mutually contradictory, requiring some curtailment and regulation if a society is to operate effectively. Not everyone can go everywhere at once, and when free speech consists of racial abuse it can easily impinge on other, arguably more important, freedoms. To the extent that these contradictions and complications are avoided, moral norms based on human rights tend to be minimalist. Requiring respect only of the most fundamental and uncontroversial liberty rights they can set a base standard but cannot easily be used to specify what morality requires beyond that. Codes of conduct developed from multinational corporations tend to fall into this category, requiring the corporations not to infringe on liberty rights in the countries in which they operate, but imposing no obligations in respect of welfare rights, despite the power and wealth of the corporations, and making relatively weak demands in respect of how they respond to the curtailment of rights by the governments in the countries in which they operate. To the extent that rights-based norms seek to go beyond the minimalist, on the other hand, they almost inevitably run into difficulties, imposing unrealistic obligations, impinging on the recognised rights of other parties, and upsetting carefully developed checks and balances. Like virtue ethics, the ethics of care is particularly suited to the exploration of complex situations and of the demands of specific roles and relationships. It is rooted in people’s experience of intimate, domestic relationships and can be applied effectively both in the domestic arena and to situations than can in some way be seen as extrapolations of that: where people find themselves in situations in which others are peculiarly dependent on them, for example. The ethics of care is also valuable as a counterweight to the more orthodox ethical theories it critiques. Whether we choose a Kantian, utilitarian or contractualist approach to an ethical problem, it is always worth looking at how the ethics of care might be used to critique our conclusions. Whether or not it is true to say that the orthodox theories are masculinist, they are all the products of the same general culture and the same philosophical commitment to a fairly tight definition of rational argument. They are also, for the most part, the products of men at their desks, and of men who were more at home in the worlds of intellectual reasoning and introspection than in those of feeling and sensation. Brilliant they may have been, but the great philosophers of history could not by any stretch of the imagination be called normal, or even well-balanced. Given 19 Normative ethics © John Hendry 2007, 2013
  • 20. this context, the orthodox theories are likely to lead to very similar conclusions, and if they are biased they are likely to be biased in the same general direction. With its more flexible concept of reason and its greater reliance on emotional experience the ethics of care offers a recognisably different perspective on the moral world. There is no reason to suppose that it is any less socially conditioned, but to the extent that it too is biased it is likely to be in a different direction. Of the ethical theories at our disposal it is perhaps the most likely to pick up points that the orthodox theories may miss. It is also helpful to bear in mind more generally the feminist critiques of mainstream ethical theory, not all of which are actually embodied in the ethics of care. In particular, whenever an analysis claims to treat people equally, whether as Kantian ends, as bearers of utility or of rights, as participants in a hypothetical social contract or real deliberative process, we should ask whether this is really the case, or whether the theoretical ascription of equality masks real-world inequalities. 20 Ethics and Finance Ethical foundations